(Hansard)
WEDNESDAY, JULY 31, 1996 -- 2 p.m
Afternoon
Volume 2, Number 10, Part 1
[ Page 1229 ]
The House met at 2:05 p.m.
Prayers.
G. Brewin: I am delighted to introduce to the House today four very important people in my life who are here on their annual home leave from work with OXFAM-Canada in Namibia: my daughter, Gillian Brewin; her husband, John Graham; my newly minted ten-year-old granddaughter, Danielle; and her brother Iain. Would the House please make them welcome.
Hon. G. Clark: It's my pleasure to introduce the chief of police from Punjab, India: Mr. Mahil Singh Bhullar. Accompanying him today are some residents of Vancouver: Mr. Dharam Singh Hundal, Mr. Pakhar Singh Sangha, Mr. Dalip Singh Sandhu, Mr. Amrik Singh Sangha, Mr. Kuldip Singh Lekhi and Mr. Manmohan Singh Sangha. I'd ask all members to make them most welcome.
L. Reid: I have two introductions today, if I might. First are four very fine constituents from the riding of my hon. colleague from Delta South: Bill Clark, Donna Clark, and Ryan and Brayden. I'd ask the House to please make them welcome.
If I might, hon. Speaker, I'd also ask the House to please welcome Janet Lynne Ecker. She's a member of Ontario's provincial parliament, and she represents Durham West.
G. Abbott: In the gallery today are Profs. Robert Eisinger and Donald Balmer of Lewis and Clark College in Oregon. Professors Eisinger and Balmer teach political science, which, as you know, is the noblest of all professions, with the possible exception of our own. They regularly bring international college students here for insight into the exotic world of B.C. politics. I'd ask the House to make them welcome.
Hon. A. Petter: I'm pleased to say that in the gallery today are the sons of a member of my staff: Tyler Wickware, age 12, and Scott Wickware, age 9. They are visiting, together with their grandmother, Velma Lanceley. I'd like to ask the House to make them feel very welcome.
R. Coleman: I'd like the House to welcome my daughter Jacqueline Coleman and her friend Wendy Woodhead, whom I refer to as my other daughter. Jacqueline and Wendy will both be attending UVic this fall, taking their second year of university. Would the House please make them welcome.
M. Coell: Mr. Speaker, I'd like to introduce to the House Jack Janzen from Mayne Island, in my constituency. Would the House please make him welcome.
Hon. U. Dosanjh: May I add my welcome to the chief of police from Punjab, Director General Mahil Singh Bhullar. When we were on a trade mission with my colleague the hon. member for Esquimalt-Metchosin -- from the Island here -- and the member for Yale-Lillooet, Mr. Bhullar was extremely hospitable to us. The generosity shown was wonderful, and I want to thank him. Would the House please make them welcome.
Hon. S. Hammell: In the gallery is Janet Gooch, our candidate for Okanagan East in the last election. With her is her daughter Patricia and her son Derek. Would the House please make them welcome.
Hon. D. Miller: Joining us today in the members' gallery is a former member of this House, a former minister and a good friend, Carl Liden, and his grandson Warren Wulff. I would ask the House to make them both welcome here today.
S. Orcherton: I know that every member of this House understands the support that's required from members of their families. My support mechanisms are here in the gallery with us today: my mother-in-law, Madelaine Burbridge; my father-in-law, Kerry Burbridge; our oldest daughter, Caitlin Kolodziejak; my son Mackenzie Orcherton; my other son, who is two years old, Connor Orcherton; and, of course, my wife, Margaret, is with us today. I'd ask the House to make them welcome.
Hon. U. Dosanjh: A friend of mine, Major Mandor, is alleged to be in the gallery somewhere. If he is, I would like the House to welcome him and 20 of his guests from England who are here visiting us.
H. Lali: Visiting from Manitoba is Ms. Toby Moroz, who is soon to be a resident of British Columbia. She is in the visitors' gallery. Would the House please make her welcome.
PHOTO RADAR PROGRAM
G. Campbell: My question is to the Minister of Transportation and Highways. We understand that there has been a legal dispute with regard to the ownership of the software required to put photo radar in place. Can the minister tell the House if in fact photo radar is going ahead on Friday?
Hon. L. Boone: That was a great question to get; I wasn't expecting it.
I understand that the police received a letter from ATS, the company that we entered the contract with, stating that they did not have the legal right to proceed with the software, to use the software in the cameras. The Attorney General ministry is currently reviewing that. I believe that we do have the right to use that software. Hopefully, we will be proceeding with photo radar on August 2, the worst weekend of the year for accidents on our highways. We want to make sure that those cameras are out there so we can save the lives of British Columbians.
G. Campbell: I'm sure that all of us in the House would like to be sure that we have safety on our highways through the long weekend. Because of that, I'm surprised that this whole issue has been handled so ineptly by the government. How can we get to July 31 and suddenly realize that there is a problem? For the second time, let me ask the Minister of Transportation and Highways this question. The opposition has been unable to obtain the completed contracts that have been entered into between the government and the companies involved in implementing photo radar. We've also heard that the former Minister of Finance is on contract with one of the companies involved in implementing photo radar. My question to the minister is: can she confirm to the House whether or not the former minister is involved with any company involved in implementing photo radar in British Columbia?
[ Page 1230 ]
Hon. L. Boone: I have absolutely no idea whether the former Minister of Finance is involved with the company in any way, shape or form.
S. Hawkins: When the Minister of Health put a halt to the regionalization program -- that failure that we all read about last month -- she deliberately ignored the opposition's calls to send the review to an all-party committee. Instead, she set up a committee of NDP backbenchers. Well, we have obtained confidential documents that expose the hypocrisy of NDP claims that its review of New Directions would be open and would result in an honest assessment. Only days ago the minister assured us that the hallmark of the review committee would be its ability to provide a comprehensive consultation process. Instead, the confidential documents we've obtained show that only five out of 82 provincial community health councils are going to be consulted.
[2:15]
The Speaker: Question.
S. Hawkins: How can the minister stand up in the House today and say that thorough consultation is taking place when she knows that only five community health councils are being consulted?
Hon. J. MacPhail: I think the quality of confidential documents is on the wane, just like the question periods are in this House, hon. Speaker.
This is an open process. We look very much forward to hearing from the opposition parties on exactly where they stand on health care. It will be refreshing to get a solid position from them. In the meantime, there is solid consultation going on with the community health councils and the regional health boards, and discussions with them will be thorough and complete.
The Speaker: Supplemental.
S. Hawkins: The NDP have a track record of leaving the people of B.C. out of their decision-making. It's a shame that they are leaving them out of the decision-making and the reassessment of the health care system.
The five community health councils which are being consulted are all from NDP ridings; that's a coincidence. Four out of five of the regional health board chairs being consulted are from NDP ridings as well. Three of the ridings are represented by members on the review committee. My question to the Minister of Health is: why is she playing such blatant partisan politics with the people and patients of British Columbia?
Hon. J. MacPhail: It's interesting how the position of this opposition party on health care changes depending on the week. Just last week, this hon. member was saying that our burgeoning health care system costs were out of control. Now she suggests that an appropriate review that is thorough and complete, but expeditious, is somehow inappropriate. We have four government caucus members, all of whom ran on defending universal medical care, unlike the opposition members on that side. They will be meeting with everyone necessary in order to determine what the next steps are toward implementing regionalization.
G. Farrell-Collins: It is unfortunate that the minister thinks that the only people necessary to meet with happen to hold New Democrat membership cards. According to the confidential documents, Jack Gerow, former HEU business manager and longtime New Democrat member, has been chosen to "provide the caucus committee with an informed, independent perspective." If the Minister of Health really wanted to provide the committee with an independent perspective, why would she hire the former business manager of the HEU, a longtime NDP member? Did the minister want to find an independent review or did she want to find a whitewash cover-up of one of the worst public policy decisions in the history of British Columbia?
Hon. J. MacPhail: The Liberal opposition has now written off 40,000 health care workers who are represented by the HEU. I guess they don't contribute. But in any event, Jack
Interjections.
Hon. J. MacPhail: It is summertime, I know.
The reputation of Jack Gerow is well known throughout the health care system. He not only was the general manager of the Hospital Employees Union but he was also a member of a regional health board -- a well-respected member of a regional health board. He has worked with other health care professional organizations, and his reputation is well known. He will be a great asset to this review.
G. Farrell-Collins: Indeed, his reputation is well known; I hardly think he will be providing an independent bit of advice to the government of British Columbia. Hon. Speaker, not only is the advice not independent, but it's awfully expensive. The internal documents indicate that Mr. Gerow is paid a fee of $400 per day, plus expenses. For eight weeks of work, he's going to take home $25,000. Can the minister confirm that the new fair-wage rate for patronage appointments in her ministry is $12,500 a month?
Hon. J. MacPhail: The reputation of Mr. Gerow is extremely well known. There will be value for money in every single payment that is made to Jack Gerow. Other people will be assisting in the reference group, as well -- well-respected people with the same reputation as Mr. Gerow; people from throughout the province: Jack Altman, Rick Roger and Lucy Dobbin, all of whom are adequately compensated, as well. And you know what? The investment is excellent; they'll be good value for the money. We'll move on and take the final step toward regionalization, and have universal, accessible and affordable services in this province.
G. Farrell-Collins: Can the minister tell us why the people of British Columbia -- why the government of British Columbia -- have to pay $18,000 to $25,000 to get their point of view?
Hon. J. MacPhail: I know that the hon. member is relatively new to British Columbia politics, but Mr. Gerow hasn't been the secretary-business manager of the HEU for a fair number of years. In fact, I think it was in the late eighties that he last served as the secretary-business manager. But you know what? We actually value the work that unions do in this
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province. We actually value the work that front-line workers in this province do, just as we value the management of hospitals. Lucy Dobbin, Jack Altman and Rick Roger make a contribution based on their experience. So does Jack Gerow.
J. Weisgerber: My question is to the Attorney General. The NDP's pre-election promises and the throne speech proudly trumpeted the hiring of "100 new police officers patrolling our neighbourhoods." [Applause.] Don't get too excited. One hundred and four police officers have left their local communities to work in the photo radar regional offices. Can the minister confirm that these 100 new officers simply replaced 104 people hired by the Attorney General to man the white elephant known as photo radar?
Hon. U. Dosanjh: I'm really proud to be part of a government that's injecting 100 new police officers into the police forces, for the safety of British Columbians.
Interjections.
Hon. U. Dosanjh: It's important for the opposition and the other parties to understand that we have announced many initiatives that go towards public safety: the DNA lab, the gene sequencer, the forensic dentistry lab that we've funded. We've also hired 25 new police officers for the unsolved-homicide squad. We are extremely proud of all the work we've done in public safety initiatives, and there will be no reduction in that work.
The Speaker: The member for Peace River South on a supplemental.
J. Weisgerber: I assume that the short answer is yes, the 100 officers do replace the 104 people working in photo radar.
Interjection.
J. Weisgerber: Photo radar is still snapping pictures. It's not being implemented; the government can't get it up and off the ground.
Can the Attorney General advise us whether his ministry will continue to pay the 104 officers and all of their expenses, regardless of the Minister of Transportation's inability to get photo radar operating in this province?
Hon. U. Dosanjh: Policing in British Columbia is independent of the Attorney General in terms of the day-to-day functions of police forces. The Ministry of Attorney General does not directly pay police officers to do the work they do in British Columbia; various forces across British Columbia pay their police officers.
M. de Jong: Returning to the memo and the Minister of Health, I'm tempted to say that the government is erecting obstacles in the path of the opposition. When you read that memo, it's obvious that the government has no intention of undertaking a meaningful review of the fiasco that New Directions and Closer to Home have become. This is about an NDP government taking an NDP committee to NDP ridings to hear submissions from NDP members for a report that's going to be written by an NDP hack who's reporting to the NDP's chief spin doctors, Mr. Speaker. It's going to be a failure. Maybe that's what they'll call it: the McFailure report. Will the Minister of Health reconsider this sham of a review and provide British Columbians with what they really want and deserve -- a truly accessible opportunity for them to capitalize on their experience and expertise in building a health care system that puts patients first?
Hon. J. MacPhail: Actually, what the opposition fails to recognize is that what the people of B.C. want is universal, affordable and accessible medicare, not another committee of Liberal Party hacks. That is what they don't want. This review will be thorough. This review will be complete. This review will talk to the people who need to be talked to. It will be done by government caucus MLAs who believe in a universal, affordable health care system, and they will deliver a report that moves forward a fully funded system -- unlike the one that that party campaigned on in the last election.
Hon. D. Miller: It's my privilege to table the 1995 and 1996 annual reports of B.C. Hydro.
Petitions
J. Weisgerber: I rise to present a petition signed by 1,139 residents of the Prince George area, many of whom live in the constituency of the Minister of Transportation and Highways: "We, the undersigned, are opposed to the government's use of photo radar and want the government to discontinue its use on B.C. roads immediately."
Hon. J. MacPhail: In the House, I call Committee of Supply. For the information of the House, we'll be debating the estimates of the Ministry of Finance and then the Ministry of Forests. In Committee A, I call Committee of Supply. For the information of the House, we'll be debating the estimates of the Ministries of Employment and Investment, Municipal Affairs and Housing, and Small Business, Tourism and Culture.
[2:30]
The House in Committee of Supply B; G. Brewin in the chair.
On vote 29: minister's office, $348,000 (continued).
Hon. A. Petter: Before we get into the debate, I thought I would just introduce some of the staff who are with me for this component of the estimates. Seated next to me is Thom Thompson, who is CEO of ICBC; and on the other side, Greg Basham, who is manager of strategic planning and policy at ICBC; and seated behind me, Lawrie McFarlane, who is dep-
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uty minister for the Crown corporations secretariat. I'm very appreciative of them joining me, in addition to some of the other staff who have been here previously to assist in this estimates debate.
D. Jarvis: First of all, I would like to compliment the minister for getting his financial report and business report on ICBC out some eight months after the end of the year -- not quite as deficient as other ministries. That's a good start anyway. There is a lot of information in there I was worried that I was going to have to ask about, but I think I can dig it up from the financial report.
Madam Chair, we're not too excited about looking at some of the things in the ICBC annual report. There's the fact that Autoplan policies, as we were saying earlier, have increased by about 2 percent over 1994, and the total cost of claims during that same period has increased by about 10-1/2 percent. The government contends that ICBC spent approximately $29 million on traffic safety initiatives during 1995. Clearly, this money has not been targeted that well, as the total cost of claims has increased approximately five times faster than the number of Autoplan policies. It gives one reason to wonder whether this money is being directed at the right source and to the right spot. I'm not too sure whether it is part of the insurance company's policy to be so involved in all these extra plans, like the Road Sense program -- or what the government would have us think are theirs. Are these ICBC's position, or are they more the responsibility of the Attorney General's office or perhaps of the Highways ministry?
In any event, we know that accidents result more from chance than from true fault. There are statistically unavoidable accidents; we know that. As the minister knows, accidents are a fact of life that will occur, as driving is a very complicated activity. We can modify them through education and legislation, but so far it appears that this is not being done at this time. The last thing we want to see is the accidents up, so let us
On page 4 of the report, it is stated -- which rather perturbed me -- that ICBC has changed their thinking as to who they are:
"We've become a loss-prevention company rather than 'just' an insurance company. The difference may not be obvious outside ICBC yet, but it is noticeable within. We have changed our focus from fixing up broken lives, broken bodies and broken vehicles to getting right to the causes and stopping claims before they happen. We're basing the premiums of B.C. motorists on significant anticipated savings."So there, probably, will be my first question: what do they mean by "anticipated savings"?
We are faced with a great change that's coming in the insurance industry. We can see it shaping up. ICBC is...I wouldn't say necessarily in deep trouble, but they're certainly being attacked from outside, and that fact has been reported to us. We can see it, in that we have the Hongkong Bank and Canadian Direct Insurance going after ICBC's policyholders with lower rates. They are, ostensibly, cherry-picking the good risks and leaving ICBC with the poor risks.
At this point I would ask the minister if he could give me a basic idea of how they are planning to pay for all
Hon. A. Petter: I very much appreciate the member's question. The Road Sense program that has been undertaken by ICBC is not an altruistic program, although it certainly has tremendous benefits for the public. It is a program designed to achieve savings by investing in prevention in particular areas where that investment will pay back in savings to ICBC.
I can give the member an example. In the case of the enhanced drinking-driving CounterAttack campaign this summer and fall, which ICBC is funding, over two million motorists in the lower mainland and lower Island will be checked. It is expected to reduce alcohol-related crashes by 10 to 20 percent, based on past experience. The costs for the enforcement activity are about $5.4 million -- about double last year's, incidentally -- and the expected savings are almost three times that amount, in the range of $15 million.
What ICBC has been doing is identifying key areas in which, by targeting dollars toward prevention, they can reduce the amount that they would otherwise have to pay out in the form of claims. The same is true of the intersection improvement program. By looking at key intersections that have historically produced high volumes of accidents and, therefore, high costs to ICBC as an insurer, they have been able to produce savings for themselves by targeting investments into improvements on those intersections. This is an obvious and very laudable benefit of an insurance company, particularly a public company, being able to assist in prevention in a way that produces real economic benefits to the corporation and therefore, in the long term, to its customers.
D. Jarvis: That was a rather interesting explanation, but the minister doesn't seem to be aware from my statement at the start that things are changing drastically. The massive savings they
I was looking at some of the stats that came out in regard to alcohol-related speed, without-due-care and failure to yield the right of way. That's broken down into deaths, injuries and collisions. In alcohol, the deaths are up very little. In speed, they're up minimally; deaths are up seven. Without-due-care deaths are actually up 40, and that's quite a bit. That's a good size. In failing-to-yield, they are not up. When you get into the collision-and-injury
Hon. A. Petter: Let me say that the accident rates and injury rates would have risen far more dramatically had there not been initiatives of a preventive nature undertaken by ICBC in the past year.
An Hon. Member: You think that.
Hon. A. Petter: The member is heckling that I think that. No, that is the basis on which ICBC has made these investments. I believe there are reports and studies that have been undertaken to back that up, and these investments are in fact paying dividends. But the question, then, is: why is there
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greater growth in the dollars paid out than would be suggested simply by the number of accidents? The reason is that the damages, particularly soft-tissue injuries and general damages awards, have increased exponentially in that same period, and that has added greatly to ICBC's costs.
D. Jarvis: Vehicles, it's been told me, supposedly are engineered nowadays a lot better to avoid some of these smaller accidents. I was kind of shocked to find out that in one year we've had a 60 percent increase in injuries. The vehicles haven't caused it; the number of accidents isn't up 60 percent overall. Why are the injuries suddenly jumping up to that high figure? Can you explain that, or do you have an idea?
[2:45]
Hon. A. Petter: I'm advised that there are a number of factors that are contributing toward this. One is that the number of claims seems to be rising relative to the number of accidents. Perhaps we're becoming a society in which we have a higher expectation of compensation, or our threshold level for compensation has diminished. The awards themselves have increased, perhaps in part as a function of court-ordered awards, but also, again, as a function of societal expectations.
In addition, some of the increase may be a result of the fact that there is a greater survival rate of accidents, due no doubt in part to medical advances. This is good news, of course, but it means that there are added costs in terms of the compensation and support required for those who survive accidents who in the past might not have survived those accidents.
D. Jarvis: I don't know about survival; the deaths are up a bit. Nevertheless, I wanted to get into another aspect of this and throw a few questions at the minister regarding the freeze of ICBC -- the two-year freeze that was reported. As I said earlier, when I first started, it's rather disturbing that ICBC would have frozen their rates. Obviously it was from political interference. How they're going to come around it, one doesn't know. It just doesn't make economic sense. We have the highest rates in Canada; we have the highest claims per capita, they say; we have the highest repair rates in Canada; our cost of living is higher; we have more precipitous roads, etc.; our claim volume is going up and up. Can the minister tell us: is he expecting more premiums in this next year?
Hon. A. Petter: First of all, I just want to advise the member that the information I have is that we in fact do not have the highest insurance rates in the country. I think that if you go to Toronto or Montreal, you will find that the rates are higher.
We do have among the highest incidence of accidents, it's true, and that is, of course, a major concern. We have seen a pattern over recent years of rates continually climbing at a level that I think the public has been concerned about and that I know that government has been concerned about. I see the decision to freeze rates not in any way as being political interference but as being a challenge to ICBC from government -- which is ultimately responsible for ICBC, which is why we're having this debate today -- saying that these problems, which the member quite correctly identifies, these unacceptably high accident rates and the costs that flow from them, cannot continue to simply be solved by passing the cost along to the consumer. The consumer ultimately will not support a system that does that. Therefore we've got to find other ways of tackling these problems, through safety initiatives, cost savings and other measures.
In terms of the question of premium growth, yes, there will be some relatively modest premium growth. There is not a rate increase, as the member indicates; the premium growth will come about as a result of people perhaps buying more insurance and more people buying insurance -- but not, obviously, as a result of any increase in rates.
D. Jarvis: Would the Premier or his staff be in a position to advise us if there has been a significant drop, or any type of drop, in premiums in the first half of 1996?
Hon. A. Petter: No. In fact, I'm advised that if one uses the freeze as the baseline, there has been a growth in premiums in the first six months. That may be due in part to some of the innovations in marketing that ICBC has brought about in their Autoplan 12 program, through which people can now purchase on a monthly basis, etc. So, in fact, there has been a growth in premiums from the assumed base of the freeze.
D. Jarvis: Well, then, the direct writers really are not telling us the truth, saying that they're out there signing up ICBC people and cherry-picking, as I said earlier. The Hongkong Bank and Canadian Direct are doing very little underwriting, then, because if they were doing the underwriting that they suggest they're doing or that you hear in the rumour mill, your volume should actually be going down.
Hon. A. Petter: First of all, I want to say that I share the member's concern about insurers coming in and skimming. If that's what he's suggesting, I share it. To this point, the impact of the introduction of some of that new private insurance has been minimal, but I will say for myself -- and I think on behalf of the corporation as well -- that there is a concern. Obviously, this new insurer that has come into the market is targeting itself very specifically, both geographically and in terms of the potential clients it will service. It is taking only those who have the most minimal risk, those who fall in the lowest-risk categories. To this point, there has not been a huge impact. But obviously there's a concern that as this insurer establishes itself and becomes better known, and if it continues to focus on essentially creaming off the low-risk end of the market, it could become a more significant and detrimental factor for public insurance.
D. Jarvis: Going again to the freeze, I would like to ask the
We've got a monopoly here that is not being run like a business. It should be run like a business, actuarially, and that's not being done. I noted, back on May 23, that the Premier said that changes in ICBC rates required approval of cabinet and that he had responded to their demands by freezing them. Does the minister have any idea whose demands those were? Was it the CEO of ICBC? Was it the board of ICBC that made those demands? And why did he freeze them? Or is he just listening to the general public, trying to get elected?
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Hon. A. Petter: First of all, with respect to the growth in the claims ratio the member refers
Interjection.
Hon. A. Petter: There we go. I'm very leery of using weather explanations in this House. Apparently the first quarter was somewhat higher than projected, but not hugely higher -- about 2 percent higher than projections. But it was a very bad period in terms of wetness, road conditions, etc. The hope -- the expectation -- is that with the introduction of photo radar and other safety measures, that ratio will start to fall. We'll have to monitor that -- and the corporation will, as well.
The member's other
Having said that, my understanding is that the board of Hydro also had been looking at a potential rate freeze strategy, basically to send the same message that the Premier wanted to send. That message was that we have to deal with these problems and these concerns differently; we cannot continue to simply pass on the cost to consumers. What we have to do is to find other solutions in the form of traffic safety, in terms of efficiencies, in terms of product improvement. We can't simply continue to do what has been done in the past. So I think it was a combination of taking some advice from ICBC and some of the suggestions ICBC itself was considering, but certainly listening to the general public and responding to the general public's concern -- which is what we as politicians are supposed to do and what I hope we continue to do.
D. Jarvis: Thank you very much for your explanation, but the minister and the Premier were elected to handle the finances of this province in a very prudent manner. It's obvious that when I say "just" listening to the people, I don't mean to say that the people out there don't understand what's going on. But neither do the Premier or the minister, because they wouldn't have frozen the rates if they had acted in a prudent manner. ICBC is a Crown corporation, and they should look after it in a responsible manner. The responsible manner would be to have it run on an actuarial basis, not on the whim of a Premier who is trying to get elected. That's the simple truth of it all.
The Chair: Hon. member, I caution you -- please, hon. member -- on personal references to ministers. "The government" is a fair statement to make, but not individuals.
D. Jarvis: All right. I shall not mention the Premier again on that.
I just wonder if the minister could now give me a breakdown on the reserves that are being held for ICBC. Could he give me a breakdown -- do they have that available, or is it privileged information -- in regard to reserves for bodily injury, property damage, collision and comprehensive?
Interjection.
D. Jarvis: Yes. I just want to know if I can get a breakdown.
[3:00]
Hon. A. Petter: Let me see if I can give a general answer. Then, if the member wants more specific information, I can try to provide it.
My understanding is that the corporation is fully, adequately reserved. That is reviewed by external actuaries, to ensure that that is the case. Total reserves are in excess of $4 billion, and they cover all outstanding liabilities.
D. Jarvis: We have the figure for the total annual premiums for 1995. I wonder if it is possible to get a breakdown as to what those premiums are, as far as bodily injury, property damage, comprehensive and collision are concerned. I'll just leave it at that.
Hon. A. Petter: Staff does not have a breakdown with them, but I'd be happy, if the member would like such a breakdown, to ask staff to provide it to him in writing and to ensure that he gets it in a timely way.
D. Jarvis: I wrote to the minister's ministry some three weeks ago and asked them for that breakdown, but I haven't received it yet. I'll drop another memo, just to refresh your memory.
Interjection.
D. Jarvis: No, I always like to refresh your memory.
I wonder if the minister could tell us if premiums are on a geographical basis. In other words, are the people of Victoria...? Are you doing that now? You didn't used to do it, and I didn't know whether you were doing it now -- between, say, Prince George and Vancouver.
Hon. A. Petter: I understand the rate structure is broken down geographically in a way that tracks the risk and accident records of various regions.
D. Symons: I have a couple of questions. I may be revisiting some of the topics covered.
During question period we were discussing the officers involved in the photo radar program. Can you tell me whether the roughly 100 officers who are operating the photo radar program are paid through ICBC? I believe the photo radar program is being sponsored by, and run through, ICBC. Are they also paying for the officers on the road who are handling that program?
Hon. A. Petter: I understand that it's somewhat complicated by the transfer of the motor vehicle branch, etc., which is, happily, not yet the responsibility of ICBC and of me for the purpose of this debate. But yes, the actual funding of the operation and of the officers is the responsibility of ICBC, as I understand it.
D. Symons: After that final transfer is through, it will be perfectly clear how that's happening, then? Then I guess we can say that during the election
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the province for public safety seemed to be a bit skewed for misrepresentation, because indeed this isn't for general public safety; it's simply for highway safety that those 100 officers are being added. Is that not the case?
Hon. A. Petter: I think those were the questions that were directed in question period to the Attorney General, and they relate to commitments that I'm not directly familiar with, as to how they're being fulfilled. So all I can speak to is the fact that in this case, the funding for these officers is coming from ICBC. How that relates to the provision of additional police officers through the Ministry of Attorney General, the RCMP and stuff is way beyond my purview.
D. Symons: I wonder if you might clear up some confusion on my part. Back in April, when the ICBC rates were frozen, it seems that there were some categories where people were being charged an increase in rates. At that time the Premier stated: "That's one of the problems of things like ICBC. They make everything more complicated than it should be. Only a corporation like that would think that an 8.5 percent increase would qualify as a freeze." But the Premier was darn well going to set them straight: "I said freeze. I mean freeze." That's from a newspaper column at that time.
What brings this question up is that apparently on April 3, which is only a matter of a week or so prior to all this taking place, the then Deputy Premier of the province, along with the then Minister of Finance, signed a cabinet order that wiped out the previous November's ICBC rates, instituting the new rates ICBC was instituting, which the Premier was saying were wrong. So who was right? Indeed, they seem to be following the cabinet order. Was the Premier incorrect in saying that they had made a mistake, or was ICBC incorrect?
Hon. A. Petter: Oh, I think the Premier is usually correct, hon. member. But I don't think it's a question of anybody being wrong; I think there was some miscommunication or confusion around the nature of the freeze that the Premier and government intended, and around the way in which that was implemented, both by cabinet and by ICBC. I think the member understands the confusion. The freeze was interpreted as being a freeze that allowed adjustments to be made within an overall revenue cap. But that was not the interpretation that the Premier had intended. An adjustment was then made, so that the common understanding of the freeze and the one that the Premier intended were then reflected in the rate structure.
D. Symons: Thank you again for clearing that up. Apparently, then, it was a misunderstanding on the part of the cabinet members who signed that OIC, I assume.
Just going back a little to Canadian Direct, I think the hon. member for North Vancouver-Seymour used the term "cherry-picking." I'm just wondering if that is an appropriate term to use for an alternative insurance company that comes along. Don't your rates that you set for the various categories depend upon the accident or the claim rate for that particular category? So if you are claiming that some company is cherry-picking or taking off the cream of the crop, indeed that cream should already be getting lower rates because of their driving records. Is that not true?
Hon. A. Petter: I prefer the term "creaming" to cherry-picking, but I accept cherry-picking. The fact is that insurance is about spreading risk and providing insurance to people through the distribution of that risk over a population base. Companies that come in and pick such narrow categories of low risk geographically, so that someone in east Vancouver can't get coverage and someone in another part of the province can, or only certain drivers can and others
D. Symons: Then I guess the minister is at least clarifying that indeed there is cross-subsidization between the various groups, it would seem. As one who's had better than a 25-year clear driving record, maybe I'm one who would object and maybe I should be looking at Canadian Direct.
I'm wondering if we might look at another area that ICBC gets involved in, and that's the business of claims investigation. I'm wondering if you might be able to give me an idea of how many claims you had during your last year that you might have the figures for. How many of those were assigned to private investigators?
Hon. A. Petter: Again, those numbers are not available to me at this time, but I'd be happy to try to get them for the member, if he seeks them. I just want to say one thing: I do not accept the member's terminology of "cross-subsidization." I prefer to use the term "spreading risk," which is what insurance is all about. But he can characterize it in his way. I do not believe that is a fair characterization.
D. Symons: I thank the minister if he would get those figures to me and thank him in anticipation of receiving them.
One last question relating to this sort of thing: during the process of owning a car, if you're involved in an accident, you have an arbitrary figure you choose that will be noted on your insurance and car registration, indicating that that car has been involved in an accident. Unfortunately, with the rates of repairs
With one of them, the damage claim and the repairs in no way affect the value of that car as a resale vehicle. In the other case, the value of that resale could be quite badly impinged upon. Yet when the car goes up for sale, the person buying it -- not knowing anything other than it's just had that much damage to it -- has no way of knowing. So the person who has a car that wasn't damaged -- to the extent of its being a danger or having future problems -- suffers at resale time. Is there maybe a better way of identifying those cars that have been damaged, so that the purchaser will have some idea of what type of damage it was, rather than arbitrarily lumping them all in the same barrel?
[3:15]
Hon. A. Petter: I appreciate the member's comments and concerns. There are some responses that are in fact being taken to try to ensure that the difference between ephemeral body damage and structural damage doesn't become a problem.
[ Page 1236 ]
First of all, dealers are all legally obliged, as I understand it, to disclose the nature of damage when they sell a car. There is also a vehicle damage information line that ICBC has which directs people to the nature of the damage. And, of course, ICBC is very concerned that when repairs are conducted, they are quality repairs that do in fact deal with structural issues. They have an accreditation program that seeks to achieve that end. Then, of course, when buyers are aware that there is some damage, they will presumably make whatever efforts they can, through inspection or otherwise, to advise themselves fully as to what that damage was. The member makes a good point, and those are some of the responses that speak to that point.
D. Jarvis: In the last two years, how many ICBC managers who required severance pay were fired or terminated as the result of a judgment?
Hon. A. Petter: I'm told that in 1995 there were approximately 12, and all were handled within the context of PSERC guidelines.
D. Jarvis: Could the minister then advise us as to the cost of the severance packages and judgments, if there were any?
Hon. A. Petter: We do not have that information here, but if it's important to the member, I'll have representatives of the corporation provide him with the aggregate cost of those severances.
D. Jarvis: I thank the minister for doing that for me.
I would also like to add that the media report that there is -- how do I put it? -- a lot of
Hon. A. Petter: I'm informed that seven of the 12 were due to restructuring within ICBC of some of its divisions. Even if that's discounted, 12 out of 3,900 is not an inordinate number of people.
D. Jarvis: Maybe the minister missed my first question when I asked it, but I was referring to managers.
Hon. A. Petter: Fair point, hon. member. Twelve out of 450 managers in total would still not be an inordinate amount.
D. Jarvis: I wonder if the minister could tell me how the record in this area compares to other Crown corporations.
Hon. A. Petter: No, I couldn't tell the member how it compares with other Crown corporations. But there's a meeting down the hall, and the minister there may be able to shed some light on how other Crown corporations are in this regard. I don't have that kind of comparative data.
D. Jarvis: Now that ICBC has discontinued the traffic safety programs in the elementary schools, there is a great reduction in the involvement. Why would they do this? How is it going to affect accident rates, etc., in the future if you cut the safety program out of the elementary schools?
Hon. A. Petter: The information I have is that there has been a shift of resources within the school program but no reduction of resources. The decision was made to target more resources at the 13-year-old-and-up category because of the greater benefits that would result from having staff interacting with that age category. The information that was previously provided for elementary school classes is still provided; it's just that there's been a shift and retargeting of some of the additional resources at age categories where it is felt that the information and education will provide a greater benefit in terms of road safety.
D. Jarvis: I wonder if the minister could tell
Hon. A. Petter: I'm informed that the negotiations concerning the implementation of pay equity are ongoing, and therefore I don't have a number to hand. But even if I did, I'm not sure it would be prudent to share it at this time, given that this is still a matter of negotiation. I'm told it's a very small component of the overall salary and pay that is likely to be involved. Perhaps, once the negotiations have been resolved, I could release the numbers to the member.
D. Jarvis: The Pacific area, as we all hear and have been informed by experts, is going to be subject to great earthquakes and catastrophic problems any day or any month or any year. Does ICBC have catastrophe coverage for an event like that? Do they have adequate amounts to protect the interests of all British Columbians? There would be a large percentage of damage to automobiles insured in the lower mainland. Most of the drivers in British Columbia would find themselves without insurance. Could you answer that for me?
Hon. A. Petter: The corporation, I'm informed, does monitor and try to assess the potential risk, as best one can, of some kind of catastrophic event and has determined that it can absorb that risk within itself -- or self-insure for that risk. Obviously, it's an ongoing matter that needs to be monitored. If there were a concern, I suppose there would be other options open to the corporation, but at this time the corporation does not have any
D. Jarvis: One last question, and then I'll turn it over to my colleague from the Peace River. The cost of photo radar: what portion of ICBC premiums paid for that?
Hon. A. Petter: It is $16 million.
J. Weisgerber: I've long been intrigued by the rationale of ICBC for paying capital costs on road construction. It's always been an interesting argument -- to hear the government,
Hon. A. Petter: The budget last year -- and it's likely to remain the same this year, as I understand it -- was in the category of $2 million to $3 million. That provides both for planning and consultation with municipalities, for example, to
[ Page 1237 ]
identify key intersections that could, through a small investment, be upgraded in a way that would produce a benefit to ICBC in terms of claims. The savings from that vary from intersection to intersection, but as I understand it they can be as high as 6 to 1, in terms of the reduction in claims as a result of the investment, and no less than perhaps 2 to 1. They're done in consultation with local communities and others as a way of providing improvements that have a direct benefit to ICBC by reducing the dollars they would otherwise have to pay in claims.
[3:30]
J. Weisgerber: Can the minister advise me whether there are any capital projects that are the primary responsibility of the province? In other words, are there capital projects undertaken by ICBC outside of municipalities -- roads that would normally be maintained by, and that are the responsibility of, the province?
Hon. A. Petter: I'm informed that the majority would be municipal, but there are some examples where the corporation has made contributions to improvements on the provincial highway system. The only two I've been made aware of are two such projects on the Sea to Sky Highway.
J. Weisgerber: It is very hard for me to rationalize a provincial government recognizing that there was a risk that caused traffic accidents and which also put British Columbians' lives at risk -- that somehow there would be the inference that the province was unwilling to go ahead without the contribution of ICBC.... If that's not the inference to be taken, then one must assume that the only other rationale can simply be a tax shift away from provincial taxpayers to ICBC customers. I'm prepared to accept, grudgingly, the argument that, with municipalities, there needs to be a contribution from ICBC to make the improvements or to allow the improvements to proceed. I would argue that that may well be a more primary responsibility of the province. But I think it's entirely wrongheaded of the province to start looking to ICBC for capital contributions on roads and highways, and I can tell you I'm absolutely opposed to it.
Hon. A. Petter: I hear the member's concern. I don't necessarily agree that it's quite so clear-cut. Frankly, I think it makes some sense for a corporation that benefits economically from improvements to contribute towards those improvements, whether it does so municipally or provincially. I would agree to the extent that this should not be viewed as a way of off-loading expenses. But if it can mean that improvements that would otherwise not go ahead in a particular year or on a particular schedule because of budgetary limitations -- and the member is aware that while it would be nice to improve every highway and road in the province so that we reduce accidents, that isn't always
This is a pilot-type initiative, a very small investment. I think we should monitor it, and I'm sure the member will scrutinize it to make sure that it's not being abused. But I don't think there's anything irrational or untoward. In fact, from what I understand, the evidence suggests it's producing tremendous benefits for ICBC, and from that point of view, it makes a lot of sense.
J. Weisgerber: I'm curious to know the budget that ICBC has for safety education, public relations and assorted expenditures -- primarily media and school safety initiatives.
Hon. A. Petter: Road safety and auto crime prevention programs are about $5.5 million.
J. Weisgerber: The next item I have in this line of questioning is photo radar, and there have already been a couple of good questions asked. Listening to the responses to the members, I understand now that ICBC is contributing to the costs of 100 police officers -- I expect the number is probably 104 -- and that overall, a contribution of $60 million annually is being made toward photo radar. Did I understand the minister's response correctly, with the figure of $60 million being the annual contribution?
Hon. A. Petter: The figure was $16 million, and that includes the cost of the police officers.
J. Weisgerber: So the number is $16 million annually, and that covers the annual salaries of 100 police officers. The minister can confirm if that's the case, but perhaps he could tell us what other
Hon. A. Petter: I'd be happy to get a breakdown for the member. Because the administration of this is currently handled by the Ministry of Transportation and Highways, the member could get that information from that ministry. But I'd be happy to get that breakdown and pass it on to him.
J. Weisgerber: One of the great joys of having the Minister of Finance's estimates up is that it seems to me a very hard argument for the Minister of Finance to make, to say that he doesn't know what the expenditures are. Indeed, almost any other minister can claim that this is the purview of some other ministry and shrug off knowledge of the expenditure. But let's all understand that the Minister of Finance should have his finger on every expenditure of every ministry.
Now, I know we're setting a very high standard here and one, perhaps, that the Minister of Finance wants to step back from. But the reality is -- and I'm being very serious -- that I don't think that the Minister of Finance can reasonably come to this House and say: "I don't have knowledge of expenditures." The fact of the matter is that the minister has knowledge of expenditures; that's his job. I know that from somewhere behind the minister, some documents were passed, so if he now has that information and would share it with us, fine.
I think it's an important issue to pursue. The province has forecast somewhere between $70 million and $100 million a year in annual revenues from photo radar. In his capacity as Minister of Finance, I'm sure the minister is well aware of what those projections are. I'm sure he is looking forward with some anticipation to the money coming in and with some frustration, perhaps, as the implementation is delayed month after month and as those revenues appear to be less and less tangible. But it would seem to me, in all fairness to British Columbia motorists, to customers of ICBC, that the cost of photo radar should be offset against those revenues. It seems patently unfair to me to pass off the responsibility for 100 police officers -- plus, we're led to believe, additional photo radar expenses -- while the province continues to be the beneficiary of the fines that come in as a result of photo radar. I just don't think you can have it both ways, nor should you have it both ways. To do so, in fact, is to shift taxation away
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from British Columbians as taxpayers and to put it instead on British Columbians as motorists. I'm not sure that I can support that kind of tax transfer.
Hon. A. Petter: I don't know whether I'm flattered by the faith that the member has in my command of the detailed figures of each and every activity of every agency of government, or whether I'm humbled that I have let him down in this pursuit. But I do think it's reasonable for me to say that while I don't have the detail to hand, I will be happy to make sure that he's provided it -- and that's what I have said. Who knows? Maybe next year at this time, I'll be able to live up to his exalted expectations of a Minister of Finance.
In regard to the other question he raises, I think the justification for the financial arrangement is quite straightforward. ICBC stands to benefit tremendously from the introduction of photo radar, as a result of the reduction that will occur in claims because of improved road safety. That's a benefit that will continue; it's an ongoing benefit. The revenues from photo radar that result from ticket enforcement may well diminish over time; hopefully, they will diminish over time as people become persuaded to slow down and to drive more safely. If they do so, those revenues will go down, but the benefits to ICBC will increase. Therefore there is a direct benefit, a direct relationship, between the investment that is being made in photo radar and being contributed towards by ICBC, and the ongoing and continuous benefits back to ICBC, that I think makes perfect sense. The member, presumably, disagrees with that. That's what this place is all about; I accept it.
J. Weisgerber: I have to remind the minister of the experience with photo radar in Alberta. Photo radar has been operating in Edmonton and in Calgary for years. There has been no appreciable reduction in accident frequency. The minister might be encouraged to know that photo radar revenues in that province have grown dramatically and have grown each and every year. The thing that hasn't depreciated, hasn't fallen off, has been the rate of accidents related to speed. So, with that, I acknowledge that it is a fundamental difference of opinion, but I would argue that the Canadian evidence suggests that indeed it would be overly optimistic for ICBC to start projecting drops in accident frequency, based on photo radar. First of all, the province, as of July 31, hasn't been able to implement it. So one must assume that no benefits have yet accrued. I expect that ICBC, through some blind faith, have been making their contribution toward the program, perhaps without any benefit at all.
I'd certainly be happy to allow the minister a rebuttal, if he wishes.
[3:45]
Hon. A. Petter: It comes as a shock to me to learn that the member is not a fan of photo radar. But let me assure him that ICBC has not pursued this in blind faith. In fact, they have their eyes open. They have been looking at jurisdictions around the world, tracking the experience there and undertaking studies. I understand that, in fact, they have been rather conservative in the way they've approached this. They've looked
J. Weisgerber: We'll be back next year and will certainly have an opportunity to see who's right and who's wrong.
There are two other areas that I'd like to pursue. One is the whole issue of rates and rate structures. There's a longstanding argument around how competitive B.C.'s insurance rates are, how competitive the monopoly is versus the competitive market. I heard the minister talk about "creaming" and reflect on that as being somehow unfair. I happen to disagree. I think that the whole notion of rates based on experience and geography should be structured in such a way that no one is able to cream any one segment of the market. I would agree with the member from North Vancouver that, in fact, any time that happens, it is because a segment of the market is being charged too much.
Where I find a fascinating opportunity for comparison is in my own part of British Columbia. In the Peace River region -- Alberta and British Columbia -- there are about the same number of people living on either side of the border. The geography is almost identical; weather conditions are almost entirely identical; the communities are about the same size, and road conditions are almost, again, identical. So if there ever was a case where you could compare all of the variables and come up with a true comparison of insurance rates, it would be in the Peace River country.
Every indication I have is that rates on the B.C. side of the border -- taking out the licence fees and making those kinds of adjustments -- are substantially higher than they are in Alberta. I wonder whether ICBC has done some analysis of their rates in that region of the province, to rationalize the difference in insurance rates.
Hon. A. Petter: I appreciate the member's observation. I know, in addition to his not being a fan of photo radar, that he is not a big fan of ICBC, either. So I'm not surprised at the thrust of his questions.
In comparing, I think you have to compare not only the rates but also the coverage. In many respects, ICBC's coverage is superior to that provided in Alberta. The fact is that accident rates in Alberta are substantially lower than in B.C. I know the member says that may not be true of these particular regions, and it may be cause for us to look more closely at the particular region of the province he's concerned about. I understand that ICBC is looking at perhaps moving to a more regionally sensitive rate structure. If the member has evidence to support his view, he might want to feed that into ICBC or myself as minister for the purposes of assisting in that review.
J. Weisgerber: For the information of the minister, as a matter or question of background, in another life I worked for an automobile insurer, a company that underwrote automobile insurance, so I understand at bit about the variables that exist in the market. I can tell the minister that as recently as the last campaign, when we campaigned for privatization of ICBC, we compared specific rates with similar automobiles, similar drivers, similar coverage and similar driving rates. We did it through insurers in Alberta and came up with differences running as high as $300 a year for a two-car family with identical circumstances and identical coverages.
I don't think ICBC needs me to go out and find that information for them. There's a corporation that has an organization which surely must be in a position to take the pulse and take those measures. I challenge the minister to have ICBC look at some specific examples, because I genuinely believe it represents the best comparison. It suggests to me that what's happening is that either these rates are higher because of a lack of efficiency in the corporation or there must be regions and classes of drivers that are being undercharged.
I've heard the member for Kamloops, who I know is reluctant to enter into these debates, talk about the amount of
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premium dollars raised in that community versus the overall claim costs of drivers in that community, which suggests to me that something is out of whack in terms of the way rates are structured or that ICBC's overall operating costs and claim costs are way out of line with those in the private sector. I quite honestly think it's the latter; my friend from Kamloops favours a different explanation. I encourage the minister to have ICBC look seriously at their competitive position in communities such as Dawson Creek vis-�-vis Alberta, where there is a very real and everyday comparison available.
Hon. A. Petter: As I say, the corporation is certainly prepared to and is undertaking a review of rate structures. If the member feels he has nothing he can add to the knowledge base of the corporation, then I accept that. In some ways, I guess, that is a testament to his faith in the corporation's ability to evaluate these things.
I accept the member's statement of his expertise in this area. But if he examines the no-fault accident benefits and underinsured motorist protection provided in British Columbia, he'll find that those benefits, for example, are significantly superior to those provided in other provinces. I also understand that there are some agencies that do comparisons and make adjustments in terms of comparing, on a common basis, auto insurance rates across the country. In those comparisons, British Columbia does relatively well. I'd be happy to try to provide that information for the member as well.
J. Weisgerber: I feel somewhat motivated now to go out and do some comparisons. I expect that I will probably wind up providing the minister with some very specific examples.
The final thing I want to talk about this afternoon is the issue of no-fault insurance. I'm sure that it has been debated and will be debated in these estimates for some time. Can the minister confirm for me that the possibility of introducing no-fault insurance is under consideration by ICBC and/or government at this particular time?
Hon. A. Petter: I think it's fair to say that the issue of no-fault, as part of a general review of product at ICBC, has for years been an ongoing issue when ICBC has been discussed and examined and studied, and it has been of interest provincially, as well. But I've said that, as we as a province are committed to doing a program review including Crown corporations, we will be looking at ICBC and looking at ways in which we can improve the product provided by ICBC and lower the cost to consumers, as part of that review, and that, yes, no-fault and other options will no doubt be considered and reviewed as part of that exercise.
I anticipate that there will be some opportunity to seek public input on that range of issues in the fall, but certainly the government has not made any determination at this time to move towards no-fault, although it is an issue that I think should be looked at. Other jurisdictions, as the member will be aware, have moved towards no-fault fairly recently, and I think it behooves us to consider that as one of a range of options that might be examined in light of this program review.
J. Weisgerber: My knowledge of the situation is that over the last decade more jurisdictions have been moving away from no-fault than moving toward it. In line with the minister's comments, would he commit today that there will be no move to introduce no-fault insurance in British Columbia without a broad public consultation process that is well-defined?
Hon. A. Petter: Yes, I'll certainly commit to the member that before we make any decision in respect of changes at ICBC, including the possibility but certainly not the inevitability of a change in this direction, there will be a process in which the public can express its views and be consulted. I don't want this program review to take forever in this respect, but I think it's absolutely essential that we have an opportunity for the public to be consulted, and for the views of the public at large, as well as the views of those who have special concerns and interests in ICBC and the coverage it provides, to be heard.
D. Jarvis: Following the last conversation that you had with the gentleman from the Peace in regard to rates and all the rest of
From '93 to '96, those figures come close to being more balanced when you compare B.C. to the rest of Canada, and that was because of the injection of the no-fault insurance coming out of Ontario. That threw all the figures askew and brought them all way up. Now Ontario is changing,
Hon. A. Petter: I guess I could react in a number of ways, but let me react in just two. First of all, I think one of the measures of ICBC's ability to contain costs is the fact that in terms of its administrative costs, ICBC is second to none in the country. It keeps very low administrative costs. What the member says is absolutely true: the costs of providing the insurance have gone up dramatically, and therefore the rates have gone up dramatically. That, of course, is a serious concern. Indeed, it is the concern -- that very experience -- that has motivated the Premier to announce the rate freeze and to put a challenge to ICBC that alternatives must be explored to ensure that this experience the member referred to does not continue unabated into the future. We simply cannot have that pattern of increase continue in the future and maintain an insurance plan that the public will support. Hence the decision to impose a rate freeze; hence the challenge to ICBC -- and to the public, I might say -- to find alternative strategies and solutions to keep rates down.
[4:00]
D. Jarvis: Hon. minister, you have to appreciate that you've got a problem here. If you were run on an actuarial basis -- a proper way of running an insurance company -- you could probably control your rates better, rather than having the so-called political interference come in and/or
[ Page 1240 ]
having the consumers out there paying for the cost of all those Road Sense problems. You're using the consumer again to draw up their own rates. In other words, you're saying: "Okay, the premium has to pay for Road Sense, so that has to be included in there." That is included in it, so that's keeping the rates up.
Plus there's the fact that you've got photo radar. You're going to use photo radar to keep the rates down. You've got a problem there, because the
Truly, ICBC should be a properly run insurance company. You've got all the experts there; they know how to do it. This is where the government has to stay out of the picture and run it in a proper, prudent manner.
F. Gingell: Just continuing for a moment on ICBC, could the minister advise the committee if officers and experts within ICBC briefed or advised the Premier in any way about the effects of a freeze on insurance premiums prior to the announcement?
Hon. A. Petter: I'm informed that the Premier was indeed briefed by staff within government and staff within ICBC. As I mentioned earlier, ICBC staff themselves had been contemplating the introduction of such a freeze -- for similar reasons, perhaps, to the one that motivated the Premier, but I've already referred to that.
F. Gingell: I think I misunderstood the answer by the minister earlier. I thought he referred to B.C. Hydro. I didn't hear him refer to ICBC with respect
Interjection.
F. Gingell: Okay. Well, I'm glad I've now got my hearing aid, so I
I didn't rush down to get from my desk a photocopy of a $1 refund cheque, but I assure the minister that it is there. If you want to see it, I will go down and get it. Can the minister advise the committee on the costs to ICBC of each refund cheque?
Hon. A. Petter: I assume the member is talking about the processing costs. I'm informed it's around 52 cents per cheque mailed out.
F. Gingell: Clearly we have a difference. There has to be a whole series of costs that went through -- recalculations, adjustments for the amount of premium that had been paid, and adjustments for the cost of the piece of paper, which is the cheque, and for the salaries of the people that were given this job. Perhaps there were some overtime costs involved because this was work outside. There are mailing costs. Mailing costs alone would be 45 cents, and an envelope. Do you know what an envelope costs? It's got a clear Perspex thing. Perhaps the minister could reconsider his answer.
Hon. A. Petter: Let me say, first of all, that the cost I quoted, as I understand, is the cost of the actual production of the cheques and the mailing of the cheques. I suppose I could instruct staff to go back and do an extensive study of all the other associated costs, but then next year in estimates I suspect the member would stand up and question why we had spent all the time and energy trying to find out what those costs were. I don't know what they were. If the member is trying to make the point that $1 refund cheques ought not to have been mailed, I suppose one can argue it either way. You're damned if you do; you're damned if you don't. I'm glad we did.
F. Gingell: I would think that your going back and doing all that study to answer my question is as stupid an exercise as ICBC's was to make $1 refund cheques -- absolute nonsense. Is this the way we spend our taxpayers' money -- to waste people's time?
It was quite simple for ICBC or for the Premier to make a commonsense starting point. Instead of the freeze being January 1, all our premiums expire at different times. You just happen to be lucky if your premium happened to come in in January. Mine is in July, so I didn't have the advantage of this freeze for premium-saving.
It seemed to me and to the people that phoned me -- and my office phone rang off the hook -- that this wasn't thought out with any care. It was a precipitous announcement that could have been handled in a lot better fashion. I know the minister hasn't advised me on the costs, so I'm surprised that ICBC, after all the fuss that was made, didn't sit down and actually calculate the amount of those cheques, including everything. Certainly if you haven't done it, then we shouldn't worry about it.
In the various reports that have come out -- and it was very nice to receive the December 31, 1995, statements the day before these estimates -- there are a series of statistics. I wonder if the minister could advise the committee how we're stacking up in the first six months of 1996. We've gone a full month after the first six months, so I'm sure you have some pretty good ideas on the current profitability.
[J. Pullinger in the chair.]
Hon. A. Petter: I understand there is an operating loss to this point, something in the range of $50 million.
F. Gingell: Looking back to previous years, do you have any weightings in your mind as to what the second six months of the year will do in relation to the first? If you're in the dry goods business, you have 30 percent of your sales in the month of December. I wonder if there was any thought, if it's a $50 million loss in the first six months, of what that might be for the whole year.
Hon. A. Petter: I don't think I'll speculate as to the future at this time, hon. member. I think it's fair to say that there will be an increase beyond what we now have over the next year. Fortunately, we have a well-funded rate stabilization fund and a clear determination, both as a government and through to the corporation, to find ways in which we can achieve a savings so that the corporation can become self-supporting over the next year without having to increase rates. We can anticipate that there will an increase in the operating loss over the next year, but one that can be accommodated within the finances of the corporation, including its rate stabilization fund.
F. Gingell: So at this point you say, "Okay, there's a $50 million loss for the first six months or thereabouts," and you anticipate that amount being higher than $50 million for the second six months.
There is going to be a $16-million-a-year cost related to ICBC's subsidization of photo radar. I was listening to the earlier questions, and it seems to me that that cost is going to
[ Page 1241 ]
be $6 million to $6.5 million to $7 million for policemen's salaries and $8 million or $9 million for the other costs. Have any costs of this $16 million per year been incurred yet, or will they commence after July 1? Are any of them prior to July 1?
Hon. A. Petter: I understand that they have been incurred. In fact, about half have already been incurred and are accounted for in the numbers that ICBC has already taken into account. The rest will be incurred during the remainder of the year.
F. Gingell: So if it's $16 million, it's about $1.4 million a month -- somewhere around $1.3 million a month. Do I understand you to say that you have incurred, in six months, $1.3 million a month for the period ended June, and you anticipate incurring a further $1.3 million for six months until the end of December?
Hon. A. Petter: No. As I understand it, the information I've been given is that this is a very small portion of the overall administrative costs of the corporation. Sixteen million dollars is just being costed by the corporation throughout the year on an even basis, so there's no huge separate calculation or whatever. It is simply factored into the overall operating costs of the corporation.
F. Gingell: There's a misunderstanding here. Fifty million dollars is lost for the first six months. We know about an additional $16 million per year that's going to be incurred through the subsidization of photo radar. If we are projecting and thinking about what the results are going to be for the second six months of the year, do we have to add anything to the expenses for the subsidization that's going to take place in the second part of the year, which didn't take place in the first part of the year? When did you start paying the salaries of 100 policemen?
[4:15]
Hon. A. Petter: It's a two-part answer. First, if the member is looking for the actual accounting of how funds flow from ICBC to Motor Vehicles, or whoever, for the payment of the officers and things, we'll have to provide that to him. ICBC can do so.
F. Gingell: Just roughly.
Hon. A. Petter: I don't even have it roughly, because I take it that it's transferred from agency to agency, and then there's payment out, etc. The expectation is, however, that far from there being additional costs as a result of that $16 million, there will be savings in the form of reduced numbers of accidents and deaths that result from the photo radar operation. One would hope to see those savings reflected.
F. Gingell: I would hope to see those, too. In the end, the only way we're going to keep insurance premiums down, other than a short-term blip because of an election promise, is by reducing your major costs, which is the claims.
That brings me to another question that was asked about what your reserves are. The minister gave the number at something like $4.5 billion or $4 billion.
Hon. A. Petter: Over $4.5 billion.
F. Gingell: Well, $1 billion of that is premiums you've received in advance. I've paid my premium, but you have to insure me for 12 months. So that's hardly a reserve.
The second item is not a reserve. It is ICBC's estimate of the liability for unpaid claims -- claims that have happened. The actual accident has taken place, but the process is going on toward settling that claim. Going through these things, the only real equity that ICBC has is some $364 million. You call it a rate stabilization reserve.
We're facing a loss this year in excess of $100 million, I would suggest to you quite sincerely. That is going to reduce that rate stabilization reserve, so you're going to be down to $250 million. ICBC's annual premiums are in the region of $2.8 billion, or thereabouts, so you've now got a reserve that's equivalent to less than 10 percent of your total annual premiums.
You're going to wash away a great chunk of that rate stabilization reserve this year just as you were beginning to get it built up to give ICBC some stability. You're going to wash away a great chunk of it this year because of this freeze. It may not happen, because there are some hoped-for savings that will arise as the result of photo radar, but they haven't happened yet. They are conjecture, and that's all they are.
What we do know to be fact is that the corporation has lost $50 million in the first six months. It anticipates -- and that's not fact yet -- losing more than $50 million in the second half. I don't think anyone on your side of the Legislature, Mr. Minister, is going to argue that that will bring your rate stabilization fund, which is the only true reserve, or equity, down to $250 million, and that's only
Hon. A. Petter: With respect, hon. Chair, I think the member is confusing two different notions. One is the notion of holding reserve funds that cover known and anticipated liabilities, so that there is clear liquidity on the part of the corporation to satisfy its known obligations. That's what reserve funds do. In excess of $4 billion is being held to cover the outstanding costs that flow from known liabilities -- and that is what a reserve is.
F. Gingell: No, it's not.
Hon. A. Petter: Well, that's what ICBC's reserves are, hon. member. A rate stabilization fund is just what it says. It's a rate stabilization fund; it's not a reserve in this sense of offsetting against liabilities. It is a fund which builds up in time in order to assist in the stabilization of rates over time. That fund has been as low as $5 million three years ago; it has now built up to $364 million. I agree with the member's analysis that it will likely be drawn down over the next year by whatever amount is incurred by ICBC as a loss over the next year, while ICBC, along with the government, goes through the necessary changes and initiatives in order to ensure that we can live within a structure in which rates don't constantly rise.
That is the function of a rate stabilization fund. If the rate stabilization fund just kept growing and growing and growing, it wouldn't be doing the function of helping to stabilize rates. It's here to help stabilize rates, and therefore, yes, it will be there to assist in the stabilization of rates this year. It is performing its function, and for that we should be grateful.
F. Gingell: Well, I would suggest to you in all sincerity that the word you're looking for in respect to the fund is just
[ Page 1242 ]
"investment." These are funds to pay known liabilities. Reserves are normally referred to for the purpose of covering future happenings and contingent liabilities. But these are unpaid claims. You've also got an amount of money, a billion dollars of premiums that you have received, for which you have not yet provided the service, and it is called deferred revenue. It isn't a reserve; it's a liability. If I were to cancel my policy tomorrow, you would have to refund me the amount of the unearned premium.
Earlier in the discussion, the question came up about earthquakes, and in the response from the minister, we discovered that ICBC no longer reinsures for excess claims. I think that's in the report. You have a fund of $360 million, which I know you've called a rate stabilization fund, that's going to come down to $250 million. Yet the Insurance Corporation truly believes that it would be in a position to meet its responsibilities if there were an earthquake? Now, this is just the damage to automobiles. The Insurance Corporation at the moment bases its premiums on historical evidence. We haven't had an earthquake here that has caused damage to automobiles for many, many years. The last one I can think of was when Port Alberni got flooded from an earthquake up in Alaska. But we haven't had one in the lower mainland like they've had in Los Angeles. I don't know why they answered so confidently and so quickly that they felt they would be in a position to meet the liabilities that would arise from a massive earthquake in the lower Fraser Valley.
Hon. A. Petter: Well, on the member's first point, I'm not an expert in insurance -- I don't know if the member is -- but I'm informed that the term "claims reserves" is well understood within the industry, that these kinds of funds are referred to as reserves. The member doesn't like the nomenclature, I'm sorry; we could argue about nomenclature, but that, I understand, is the term. So I won't disagree with those who are more expert than I on this matter.
In respect of the earthquake risk, again the advice I received from staff is that the studies -- looking at the automobile component of damage resulting from an earthquake -- that are done by ICBC suggest that it's not justified to take extraordinary steps by the corporation or to provide for that risk, if that risk is one that can be satisfied by the corporation. What that would entail at the time and what would have to be done, I can't speculate.
But the rate stabilization
F. Gingell: I think you will agree that the rate stabilization fund is, in other accounting terms or business terms, what we think of as being equity, its retained earnings. ICBC has retained the earnings year after year to create this fund, which you happen to have put a name on called rate stabilization reserve. But other people think of it more in terms of equity. I wonder if ICBC has, recognizing
Hon. A. Petter: I don't think there's any magic number here. The board policy, as I understand it, is to aspire to reserve funds in the range of 6 percent to 10 percent of total liabilities. The fund right now is about 8 percent of total liabilities -- somewhere in the middle. Remember, the dollars that come into ICBC that go into this rate stabilization fund are paid by current drivers and motorists against future risks or occurrences. There is some cross-subsidization there that perhaps might be of concern.
In addition, remember that this is a public insurer that has, in many aspects of its coverage, a monopoly. That provides certain advantages in terms of not having to have the same kinds of hedges that would exist if it were a private insurer operating in a competitive environment in the marketplace.
I think that provides some of the context and information the member was seeking. Historically, of course, this rate stabilization fund has dipped as low as $5 million. It's now up, relative to recent years, in a fairly high range, although the mid-range is what the board aspires to.
F. Gingell: The Select Standing Committee on Public Accounts, the council of deputy ministers and the auditor general, as you know, have been working on this report on enhancing accountability in the public sector, the intent of which is to hopefully free up management to act in a proactive manner and improve the operations of both ministries and Crown corporations.
[4:30]
When one looks at a Crown corporation like ICBC, their employees are covered or protected by -- and I'd like to use that word -- union contracts. Then there are a whole series of employees -- quite a large number -- who are not covered by union contracts, as I understand it. There is some risk in any of these programs, and one can understand that the people who are standing on the front line of such projects feel that risk. We don't want to do anything in any way that's going to discourage them from supporting these types of projects with enthusiasm and dedication.
I wonder, to assist in that feeling of comfort in relation to these types of projects, whether the minister would encourage the corporation to bring in or designate a -- what shall I call it? -- middle-management ombudsman so that middle managers had some representative they could go to -- not a union exercise, but some individual -- so that if they had concerns about some of the ways these things may work, they would have someone they would go and talk to, someone who would have the responsibility of ensuring that their interests were spoken for. There's always a fear amongst non-union middle management that the people above them can do what they will with them, and the people below them are protected by contracts. I wonder if the minister could give me some assurance on this issue.
[ Page 1243 ]
Hon. A. Petter: I'm informed that there is a procedure -- harassment advisers, external to the corporation -- where there's any form of harassment in the broader sense; not just sexual harassment but other forms of harassment. There are avenues for managers and others to seek the intervention of those advisers.
I think the member is suggesting perhaps a slightly broader role for an individual or official, and all I'd say is I think it's been noted by myself and the members of the corporation, and we'll take it under advisement.
The Chair: I recognize the member for Delta South for some final comments on vote 29.
F. Gingell: Well, some final questions, hon. Chair. I was very pleased, when we were talking to ICBC, to ask them one month after the end of their six months how they've been doing. We got a good number. Perhaps we can ask the Minister of Finance the same question with reference to the consolidated revenue fund one month after the first quarter. Are we ahead of budget or behind budget? How are we doing?
Hon. A. Petter: I think we're all going to have to await the outcome of the first quarterly report to evaluate where we are at. I know that the ministry is evaluating numerous indicators, and that information is normally made available at the time of the first quarterly report -- about a month hence.
F. Gingell: There is one minor item that I've tried to deal with through the office of the legislative comptroller and the office of the comptroller general, without any success.
Someone, Mr. Minister, within your ministry, in the past year, has changed the makeup -- not the amounts, unfortunately -- and the information on our paycheques. The changes are a disaster, and I cannot understand how it managed to get through any committee group within your ministry. It's terribly difficult to understand exactly what the deductions are and what the gross calculations are, whereas the previous form worked out fine. We all understood it.
Through the legislative comptroller and the comptroller general, and also having spoken to the person who's in charge of these things, I failed to get any agreement that they will re-evaluate the use of this new form. I wonder if I could get the minister to ask them to re-evaluate it.
[G. Brewin in the chair.]
Hon. A. Petter: Well, I guess the short story on this, as I understand it, is that the ministry, in an effort to move towards a more effective and efficient system, adopted what's called the CHIPS program, which it acquired from private industry. Wanting to save money, it acquired an existing software program. I understand that there are some shortcomings with the system originally introduced as of January, I believe. Some information that the member and others would like to see on the pay stub is not there. My understanding is that there is now work being done to upgrade the software to ensure that this information will be provided, while retaining the benefits and efficiencies of this new system. Hopefully that information will start to present itself in the near future.
F. Gingell: Good. I'm really pleased to hear that, because I felt I was beating my head against a brick wall.
I know the auditor general must be feeling that he's beating his head against a brick wall. We have been talking in this House about a revision to the Auditor General Act, and we've been talking about it in the Public Accounts Committee on various occasions. The act is some 20 years old. My understanding is that the bill has passed all the exercises, and I would imagine it will be introduced by the Minister of Finance. I appreciate that estimates is really not the time to talk about future policy, but I believe that the policy issues have been dealt with. So I would encourage the Minister of Finance to get the revisions to this act, which I believe have been drafted in pretty final form, brought forward. In fact, it would really be nice if it could be brought forward in this session of the Legislature. We've got things to do and the people's business to look after.
Both sides of the House are interested in the issue of accountability. We've just been through an election, and I would suggest that accountability was a big issue. This would be a tangible way for the government to show that they, too, care about accountability as much as the opposition does. I don't think any citizen in British Columbia questions our commitment to accountability. This would be your opportunity, Mr. Minister, to show that this government can also show some effort and energy towards this subject.
Hon. A. Petter: This is future policy, obviously, hon. Chair, but I appreciate the member's sentiments. I have been briefed in a very rudimentary way about this, and I have had a chance to meet with the auditor general. I want to be frank with the member: I think it's unlikely in the extreme that it will be introduced in this session. But I'm certainly aware of the issue and the member's concern, and I will bear that in mind as I pursue my responsibilities as the new minister.
F. Gingell: There is also another act which is past time for being reviewed, and that's the Financial Administration Act, a much more complex and wide-ranging subject. It would seem to me that an all-party committee, perhaps the committee on finance and whatever else is included within that category, would be the appropriate body. I would suggest that a revision of the Financial Administration Act should go through an all-party committee process first. It will be a long time between the end of this session and the start of the next session, I would imagine -- four or five months -- and perhaps it might be an idea to get this review going. The starting point is perhaps to give that to a select standing committee of the House. They're all important subjects; they affect the way government operates. I would encourage you to do that.
The Chair: Hon. members, I might take this opportunity to remind all of us about standing order 61, page 107, which says: "Only the administrative action of a department is open to debate but the necessity for legislation and matters involving legislation cannot be discussed in Committee of Supply." I appreciate many ministers being open and generous about their time and all that work, but that is what the rules of order suggest. Minister, do you wish to say something at this point?
Hon. A. Petter: With that in mind, I'll simply say that I appreciate the spirit of the member's comments and have noted them.
F. Gingell: Thank you, hon. Chair, and I appreciate your generosity in allowing me to complete the statement, get it into Hansard, and allow the minister to hear it before you advised me I wasn't doing the right thing.
It's a quarter to five, and having got to this point, I'd be quite happy for the minister to call the vote.
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[4:45]
The Chair: Shall vote 29 pass? Oh, I'm sorry, Mr. Minister. You wish to address...? We don't need any more votes introduced at this point, because vote 29 is on the agenda.
Hon. A. Petter: No, I understand that. I just want to, in very brief form, thank the members of the committee for their questions and the constructive engagement. As a new minister, I think I have benefited tremendously from the experience of going through estimates. It's sometimes a bit of an excruciating experience, but obviously the Ministry of Finance and Corporate Relations is a large and complex ministry, and the associated agencies don't make it any less so. I very much appreciate the contributions made by members towards this debate. It's been of tremendous assistance to me.
I also did not want to allow the debate to close without noting -- and I'm sure members noted -- the number of officials who came and participated with me. This is indicative of the kind of support and talent that exists throughout government agencies. At times we, both from the opposition side and the government side, say things in this House that can be misconstrued as being critical of policy. But I hope it's never misconstrued as being critical of staff.
I've been very impressed, generally, in my time as minister in government, with the professionalism of the public service. I'm certainly impressed by the professionalism of the staff in the Ministry of Finance and the other associated bodies I'm responsible for. I very much appreciate their expertise, their integrity and their advice, and I look forward to continuing to rely upon those in the years ahead. I didn't want this debate to pass without acknowledging their efforts and contribution, as well. With that, I look forward to the vote.
Vote 29 approved.
Vote 30: ministry operations, $102,247,933 -- approved.
Vote 31: registries, $8,297,129 -- approved.
Vote 32: pensions administration, $10 -- approved.
Vote 33: British Columbia Utilities Commission, $10 -- approved.
Vote 34: product sales and services, $10 -- approved.
Vote 35: information technology services division, $10 -- approved.
Vote 57: management of public funds and debt, $1,001,000,000 -- approved.
Vote 58: contingencies (all ministries) and new programs, $51,000,000 -- approved.
Vote 59: B.C. Benefits, $143,149,000 -- approved.
Vote 60: corporate accounting system, $12,890,000 -- approved.
Vote 65: Public Sector Employers Council, $2,107,000 -- approved.
Vote 66: Public Service Employee Relations Commission, $12,450,000 -- approved.
Hon. A. Petter: I move the committee rise, report resolutions and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported resolutions, was granted leave to sit again.
Hon. P. Ramsey: I call Committee of Supply to consider the estimates of the Ministry of Forests.
The House in Committee of Supply B; G. Brewin in the chair.
On vote 36: minister's office, $432,868.
Hon. D. Zirnhelt: I'd like to introduce the staff with me: Gerry Armstrong, the deputy minister, and Harry Powell, the assistant deputy minister of revenue and corporate services.
It's a pleasure for me to make this presentation for the first time as the Minister of Forests. This portfolio has enormous responsibilities. Forestry, as we know, is the driving force in B.C.'s economy, yet it is an industry that is in a time of rapid change, facing complex issues and conflicting demands. My ministry's job is to work with a diverse range of stakeholders in the province to meet those demands, resolve those issues and cope with that change.
If the issues are complex, then the goals are simple: a growing industry, a sustainably managed resource, healthy ecosystems and more jobs for British Columbians. In my presentation today, I'd like to talk about our accomplishments to date in meeting those goals. I'll discuss some of the complicating factors the industry and my ministry must deal with, and I'll address some of the specific points in our new allocation. I'll look at some of the challenges and opportunities that lie ahead for forest workers, companies and communities.
I believe what emerges from this overview is a dynamic industry that is doing well for British Columbia and is poised to do better in coming years; a ministry that is determined to get the most jobs possible out of that industry, both for today and for generations to come, by managing the resource responsibly and sustainably; and a province of stakeholders working together in communities across B.C. to find new solutions to the industry's changing needs and to make the most of our natural wealth.
First, the accomplishments. The Forest Practices Code is probably the most important progress that we've made in the last year. The new body of legislation governs all aspects of forest management on provincial Crown land. According to an independent study, the standards and procedures the code lays out give B.C. the most comprehensive forest practice law among the 14 leading international jurisdictions in the survey.
The code is helping to secure four things for British Columbia. First, it's securing forests for the future by requiring practices that keep the forests sustainable and productive. Second, it's securing other industries, such as fisheries and tourism, by ensuring that the forest practices in B.C. protect riparian habitat and viewscapes. Third, it's securing a healthy environment by protecting ecosystems and non-economic values. Fourth, it's securing markets in Canada and abroad for B.C. forest
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products, because the Forest Practices Code is rebuilding international confidence in our province and in the way we manage our forest resource.
That's why I'm pleased to see that so much progress has been made to date on implementing the code. The act and its 18 attendant regulations are now in force. Some 15,000 people have been trained in the code's requirements, and we've published almost two-thirds of the guidebooks on management standards.
As members may be aware, the code requires substantial compliance as of late last year and full compliance by 1997. The code means substantial changes, and we're committed to working with the industry and with workers to ensure a smooth transition. The Forest Service is working to implement the code in a way that limits its impact to a maximum 6 percent reduction in B.C.'s timber harvest over the next ten years.
The timber supply review is nearing completion. It's the first ever comprehensive review of every tree farm licence and timber supply area in British Columbia. For the first time, we'll have up-to-date, accurate information which will ensure that cut levels truly reflect what the resource can sustain. The code and the timber supply review are providing certainty by securing the resource. Our land use planning process is providing certainty by securing a land base. There are now land use plans in place on Vancouver Island, in the Cariboo-Chilcotin and in the Kootenays. There is also a subregional land use plan for the Kamloops area, and land and resource management planning processes are underway in 13 more areas. The result is greater certainty for industry, less conflict and a more secure future for the people and communities that rely on forestry.
I'm also pleased to say that this government has been working hard to revitalize the industry itself through our forest renewal plan. This plan has resulted in the creation of Forest Renewal B.C., an agency composed of representatives from government, industry, workers, communities, first nations and environmentalists. Forest Renewal B.C. is making investments in everything from reforestation to retraining, from watershed restoration to value-added processing.
The government is proud to be a partner in Forest Renewal B.C. It's part of our commitment to keeping the industry at the forefront of B.C.'s economy and a leader in the global marketplace. We've taken steps to minimize the impact of urban development on forest land. In 1994, we established a forest land reserve to protect the province's forest lands from conversion to non-forest uses. Subject to the Forest Practices Code, the reserve includes private lands classified as managed forest lands. We have established the Forest Land Commission to review and assess requests from owners of private reserve lands who wish to remove lands from the reserve.
[5:00]
We have made important progress in our relationship with B.C.'s first nations. My ministry has provided important advice and information to government as it negotiates with first nations. We've also provided training on the Forest Practices Code to first nations peoples. My ministry has worked hard to develop a healthy working relationship between the Forest Service, first nations and affected third parties while agreements are being negotiated.
The recognition of the rights and valid interests of first nations is a relatively recent development, and it's only one of the many changes and challenges facing forestry in British Columbia today. We now manage our forests for a wider variety of values -- economic, but also cultural, historic, recreational, social and environmental. That has meant big changes in the industry and equally big changes for the ministry.
Despite those changes, our staff is committed to ensuring the wood continues to move from the forest through the mills to markets. I know that there are those who think the change is happening too slowly, but the reality is that we must ensure sustainability. When we don't, B.C. has learned the hard way that we pay a steep price in lost jobs. Sustainability demands careful planning, input and preparation before the cutting permits are signed. The ministry has changed to meet the changing needs of forestry in B.C. and to reflect the new realities of the Forest Practices Code and other initiatives.
We are one of the most decentralized organizations in government. About three-quarters of our staff work in the forest districts and regions rather than in Victoria. We face an additional challenge on the fiscal front. People have made it clear that they are concerned about the cost of government. The Premier has responded with initiatives to bring that cost down, and my ministry will play its full part. We've streamlined our forest fire fighting capability, and we've used our reforestation resources more effectively. We're focusing resources in areas that offer opportunities to generate revenues. One of these areas is the small business forest enterprise program. We've recently retuned this program to put greater emphasis on creating local jobs. I'm optimistic that as the program adjusts to that change, we'll soon see more timber heading out the door and more sales processed.
I mentioned the fiscal challenge, and that brings me to the spending allocation for 1996-97. Members will note that it is reduced a little this year, by some $56 million. Twenty-three million of that amount is in imposed reductions -- savings that the ministry is already working to find. But a bigger share -- $33 million -- is as a result of the end of FRDA, which is the forest resource development agreement that British Columbia has with Ottawa.
Most of our needs under FRDA have now been met. We've changed legislation to improve the way we manage our forests, and the code is bringing further improvements. We will continue to meet stand-tending goals, and Forest Renewal B.C.'s enhanced forestry program is making a major contribution. We've made a solid dent in the reforestation backlog, and we'll keep making progress. It requires tough choices in regard to balancing investment and maintenance, but we are committed to putting resources where they're most needed.
We do face significant fiscal, administrative and policy challenges in the coming year, but I have to say that I feel tremendously confident and optimistic about the future. The new five-year agreement on softwood lumber exports holds out the prospect of smooth relations with our trading partner to the south. Our improvements in forestry practices are helping us secure markets at home and abroad. Now we have to join the domestic and global efforts to develop an international system of certifying sustainable forestry to make it clear to every jurisdiction that good forest practices are also good business practices.
There are important new initiatives coming on line in progressive forestry management. We have new, innovative harvesting techniques like underwater salvage; I had the pleasure of announcing such a project only a week or so ago for the Nechako reservoir. Bill 7, which recently passed third reading in this House, encourages pilot projects that offer companies an increase in their allowable annual cut in exchange for enhanced forestry commitments -- meaning a healthier resource, a greater yield and more jobs. We have
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exhibits travelling the province that showcase innovative forestry products, from model homes to fine furniture and musical instruments. It's an exciting time for forestry in British Columbia, and full of opportunities and possibilities. I intend to see our province make the most of those opportunities, because the most valuable product that comes out of the forest isn't timber, but jobs, and these jobs sustain families and support communities throughout B.C. There are 15,000 more jobs in the forest sector today than there were five years ago, and we've gone from about 1.2 jobs per thousand cubic metres to 1.4. That's an impressive record, but it's only a start. British Columbians expect us to get more jobs out of each tree harvested on public land. That's why earlier this year the Premier set out a target of 21,000 new forest sector jobs in the next five years. To help us reach that goal, we are laying the groundwork for a jobs and timber accord through the Forest Sector Strategy Advisory Committee. That committee is a partnership between our government and B.C. forestry stakeholders -- the same partnership that helped create Forest Renewal B.C.
Our government's commitment to an expanded value-added wood manufacturing sector will help us reach that goal as well. We've announced a strategy to address the three issues that have helped back the value-added sector's growth: access to wood, skills training and business development. That strategy will allow us to process more B.C. resources in more B.C. plants and create more B.C. jobs. Forestry has long been the driving force for the B.C. economy, and now we're poised on the verge of a whole range of new opportunities for sustainable growth and good, family-supporting jobs. We're making solid progress in renewing the resource and revitalizing the industry, and I look forward to building on that progress in the coming year with a valuable resource, a dynamic industry and a government that's committed to jobs, growth and sustainability.
T. Nebbeling: I too look forward to some good dialogue and question periods in order to see how we are dealing with the future of our forest. I tried to make some notes during the brief statement by the minister. First of all, I should say that I don't know if it is a tradition, but when the Minister of Finance presents his budget, the first thing he does is show us his new shoes. I noticed that the Minister of Forests had a haircut and a newly trimmed beard. Had I known, I would have had a haircut, too.
Interjection.
T. Nebbeling: So that nobody will recognize you.
The first statement made by the minister was that the forest and the forest industry are in transition. Obviously the objective for the ministry must be that it will create stability and sustainability for the forest, the communities and the people working in the forest industry. I do not necessarily agree with many of the mechanisms, which the minister has quickly explained will be part of how these goals will be achieved. The one thing I have in front of me all the time when I talk about the forest industry is: where will the Forest Practices Code, as the minister spoke about, take us in the long run? The opinions in the communities are certainly different. While the minister feels that it's an exciting time and many good things are happening, in the communities that rely on the forest industry, or on the resource industries, there's a lot of uncertainty about their future. I hope, as we go through the exercise in the coming days, that we can give these communities and the people working in the industry a level of more comfort than they have today.
The Forest Practices Code. We hear a lot about the Forest Practices Code, and in the industry there is a tremendous number of questions. No doubt we will spend a lot of time on the basis of these questions, why people are concerned and what kind of direction we can give to answering these questions. Without answers, I don't think we are going to find that harmony and peace and feeling of certainty that people are looking for.
The timber supply review. Again, that's an area the minister very proudly talked about -- that this is indeed going to be part of securing a long-term future. But if there is one thing wrong with the timber supply review, it's that there is very little focus on the presentations of the cuts that have to deal with the people who are affected by it today. I hope we can spend a considerable amount of time dealing with the social and economic consequences that will affect the communities in these areas where the timber supply review clearly projects serious cuts.
The Forest Land Commission. I hope I can ask a fair number of questions on that one, because that commission obviously plays a major role in dictating the land uses and everything. I'm not fully aware of how that all works, and I hope we can spend some time on that as well.
First nations. There is no doubt that the treaty discussions that are taking place are going to have a tremendous impact on how our forest industry will continue to flourish in this province, with the consequences of land claims. I hope that we are going to get some answers from the minister there, as well. Again, in that regard, I hope that the voices of the communities that are affected by these decisions will somehow be heard -- something that is not happening, I believe, by the system which is excluding communities from speaking up about their own concerns.
Physical challenge. Yes, there will be a physical challenge, and in particular there will be a physical challenge for a group of people that was not mentioned. But the minister did mention the program that has sustained that group of people over the years, and that is the FRDA program. I believe you stated that $30 million will no longer be available through the FRDA program. I take it, then, that Forest Renewal B.C. will take over that funding. We discussed the bill last week, where forestry workers who are out of work will be given preferential treatment in jobs that are financed by the Forest Renewal B.C. program. If FRDA is not going to come up with that money, then I can see all the silviculture activities in this province being under Forest Renewal B.C., thereby putting the traditional workforce in the silviculture area under tremendous pressure, with a big chance that many of these people will no longer have jobs. I should tell the minister that in the last two or three weeks I have received a fair number of letters and phone calls from small companies, employing 20 or 25 people, which this year have not had one contract. What the reasons are, I don't know, but we will be talking about that as well.
The softwood lumber agreement is still a mystery to many people -- if indeed the softwood lumber agreement today is secured for the five years that it is intended to be, how this province will secure its quota and how that quota will be distributed over all forest industry participants. Again, I hear a fair amount of discomfort, especially with the smaller mills, that they cannot get into the quota, because the wholesalers will not be able to participate in the divvying up of the quotas. We will have some questions there as well.
I can go on talking about the things you said, Mr. Minister, because I think that everything you mentioned, you men-
[ Page 1247 ]
tioned in a very positive way. I like to be positive as well. But maybe because I am the critic, I get a lot of people expressing opinions on these particular issues that are less positive than the minister is portraying right now. Hopefully we can deal with that.
One area where I'm really concerned, because I do not know if it works, is the Forest Practices Code, of course. In the Forest Practices Code, you have created the Forest Practices Board, which has a function
[5:15]
Hon. D. Zirnhelt: The three basic functions of the board are to carry out audits and to investigate complaints regarding forest practices, and it also has the right to access the appeal process for administrative decisions under the act. It reports to two ministers: the Minister of Forests and the Minister of Environment, Lands and Parks. It's a six-member board; it's an independent body. There's a chair and five members, a total of six. Their staffing complement is 26 FTEs. At the moment they're still ramping up their quota of employees, so they're getting ready to provide their function.
As a matter of fact, they've been meeting over the last couple of days. They have a staffing problem at the moment. They have had as many as six investigators, and now they're down to one. They're advertising for others. I have to say there's a lot of competition for jobs in this field at the moment, but I don't think it impairs the process of implementing the Forest Practices Code.
T. Nebbeling: If there is so much interest in the jobs, why is it that all the jobs that you talk about are taken? How is it that it has come down from six to one?
Hon. D. Zirnhelt: As I understand it, there is competition for these kinds of things. Companies are hiring. Companies that want to do their own audits, to be out ahead of the Forest Practices Code, will be paying. Consulting firms that get hired to do work independently for a number of non-governmental organizations or companies are hiring as well. We are also staffing up ministries to enforce and to assess the code -- and even for our land use planning. You know, there's just so much happening in the field, as we have improved the management practices, that everybody is hiring: government, independent bodies, industry. So it is difficult to staff, and people are moving around.
T. Nebbeling: Are these full-time jobs or part-time jobs, these auditors' jobs?
Hon. D. Zirnhelt: I'd like to answer the question, but actually I would like leave to make an introduction.
Leave granted.
Hon. D. Zirnhelt: I noticed that a member of the Forest Practices Board, Jack Toovey, is in the gallery. It's fortuitous that he's here listening to the debate, and I would just like to introduce him.
To answer the question, the auditors are staff positions, and they're full-time. I know that the board itself will look at contracting positions if they can't staff them, but they want them full-time. We need to build up a body of knowledge there to process appeals efficiently.
T. Nebbeling: It baffles me a bit that there are unemployed people in the province today, who most probably are very knowledgable about what happens in the field and that the opportunity of a nice, secure job working for the government is not a lure, to the extent that you have come down from six auditors to one auditor today. It makes me question how you advertise these jobs. Maybe that's the first question, because I would really like to hear from the minister what went wrong. I just cannot understand that there is such a problem finding five replacement people for these positions.
Hon. D. Zirnhelt: The first advertising is usually done in-service, within government, in the paper that jobs are posted in and that all civil servants, and people outside as well, are familiar with. If we can't staff it inside, then we go outside, and the jobs are advertised in the newspapers.
T. Nebbeling: I would like to ask when you advertised these five jobs for the first time. What was the period between losing these workers and your advertising? When did this happen?
Hon. D. Zirnhelt: I can get the exact dates for the member. They were staffed over the last year, and then people went on to other employment. They're going to be advertised in the near future, if
T. Nebbeling: Since the new code took effect on June 15, 1995 -- and I choose to read now from an article in the paper -- "the Forest Practices Board has received 32 public complaints, of which 11 are still active on file." You also said two minutes ago that these positions have been filled during the past year. Is it that the workforce of six is not enough to deal with all the complaints that the board has received, or have these positions been vacant for longer than, let's say, two or three months?
Hon. D. Zirnhelt: Some of the board members who are well-qualified -- that's why they're on the board -- are helping with processing some of the investigations. Just because they're short-staffed doesn't mean that the work isn't getting done. It's become a burden on the board. There is a backlog because the staffing complement isn't in place. It's a simple matter.
That doesn't mean they don't investigate complaints. In fact, in some of them there is a very quick turnaround. Some of them are very complex, and this is new. Not everybody in the business knows what's in the new Forest Practices Code and all its guidebooks and so on. It's a very complex field. So some of these investigations take a lot of time, and there are people who don't come with experience. A lot of them have the qualifications we need, but some of these are new areas in which expertise has to be developed, and there is a shortage of people with the full complement of skills. So that's why there is competition for the jobs. There's often difficulty in filling the job.
T. Nebbeling: Could the minister give me a rundown of the process, then? I suppose somebody in the field notices an infraction, that something is wrong, that is serious enough to bring it to the board. I would like to hear the whole process of a complaint: how it gets to the board, how the board decides the audit needs and then how they select the audit team.
Hon. D. Zirnhelt: There are two functions here that you've wrapped into one. Let me separate them. There's the
[ Page 1248 ]
audit function, where they do random audits. They'll just pick forest practices and go out on their own and do it, so they have a sense of what's happening. That gives a sort of random sample of how we're doing. That is one of their functions.
The other function is to take public complaints. If the public has complained about a forest practice, they will begin to investigate it. They'll ask for information from the ministries, look at the decision trail and probably send somebody out to have a look. Then, if they think more investigation is necessary they will do that. They will explain their decision, and a report will ultimately go to the board.
T. Nebbeling: I have to go on a little longer on this one, Madam Chair, because I'd really like to figure out the board's function, its authority and this whole audit thing, if I can use that word. The board then decides what should be audited. It is not that they get directions on a serious issue and that an audit will automatically be ordered. Can the minister answer that? Is it totally up to the board to make that judgment call, or is there another trigger that says: "This merits an audit"?
Hon. D. Zirnhelt: The board is completely independent in what it decides to audit. It will develop a methodology. I know that as we speak, they're involved in trying to come up with the best methodology. They're talking to people in the private consulting sector to try to get the very best minds to develop an audit methodology. But in terms of what they audit, where they audit and when they audit, it's totally up to the board itself.
T. Nebbeling: Okay, it's up to the board. I'm trying to get my head around this one. Now the board has an issue, and they want to deal with it. So the board has already established that there's something happening that merits a serious act like having an audit, which must have an implication for whoever is being audited or for what issue is being audited. Part of that audit team can be a board member, as you stated a couple of minutes ago. Is that indeed the case?
Hon. D. Zirnhelt: You still have to bear in mind that there is a difference between auditing and investigations. What I said was that some members of the board have been involved -- as they learn what they're doing, and to fill in the time and develop the procedures and so on -- in some of the investigations. That's where there's a public complaint, and the board and its staff investigate to find out whether it warrants further work. The audits, though, are a separate function.
To my knowledge, the board members aren't involved in audits. They really haven't been doing very many audits. It's something they have to get geared up for and staffed for, and then they will begin to do their random audits. Bear in mind that the Forest Practices Code is still so new that there haven't been a lot of cutting permits that have actually been harvested under the code. I mean, it has happened, and there has not
T. Nebbeling: I was concerned because of a previous statement that the hon. minister made -- that a board member could choose to be part of the auditing. That had happened a number of times because they were short of people who could do audits. What happens once the audit has taken place?
Hon. D. Zirnhelt: When an audit has been completed, the board publicly publishes the report.
T. Nebbeling: Are there financial consequences associated with a potential report for a third party?
Hon. D. Zirnhelt: The effect of an audit could be to ask a ministry to change its practices or its approval procedures or something like that, or it may recommend changes in logging practices or resource management practices. But the board itself doesn't levy a penalty. That is done through the enforcement agencies of the ministry.
T. Nebbeling: So the audits are more focused on internal Ministry of Forests regulations and actions than actually on infractions perpetrated by the industry, be they small or big?
Hon. D. Zirnhelt: The audits could cover the whole scope of what the ministry, other ministries and the industry are doing, and they can comment on a wide range of things. They're auditing the procedures and the carrying out of practices under the code, broadly speaking.
T. Nebbeling: These cases deserve auditing because there was a file created for specific issues; they may be code issues or forest company-related issues. Are there any cases where the forest company has been given notice that an audit will take place on an element of their operation and that they have to hold back doing their operations until the audit has been finished and the recommendations have been received by the minister?
[5:30]
Hon. D. Zirnhelt: I explained a little earlier, but I'd like to emphasize that the board is still getting its audit program up and running. They are working with private sector companies that are experts in auditing, and they are developing their methodology -- how they're going to carry out the audits. They haven't implemented any yet.
You can ask another question if I didn't quite answer your first one.
T. Nebbeling: Are there any companies today that have had their harvesting activities stopped because they have to wait for the result of an audit that has been ordered but not yet been implemented?
Hon. D. Zirnhelt: Certainly nothing by this board; they haven't served notice. But were they to do an audit on a company's practices, they may or may not notify them. They may want to go in completely cold, or they may want to give notice and go in and visit the site.
T. Nebbeling: Are there any companies today that have had harvesting activities hindered or stopped because certain practices that they have used in the past are being audited for the purpose of seeing if there is to be a correction or not?
Hon. D. Zirnhelt: The answer is no. Nothing that has happened due to the board has interfered with logging practices or the carrying out of the logging program of any company.
[ Page 1249 ]
T. Nebbeling: One of the requirements of the audit team -- I believe it is the audit team -- is that there has to be a professional member. What do you mean by a professional member?
Hon. D. Zirnhelt: They have to be a professional forester with additional qualifications to perform an audit. The primary qualification is to be a professional forester, an RPF.
T. Nebbeling: Maybe the wording should change, then, because the word "professional" is all that is described in the description of the audit team. So it could be a professional consultant on environmental issues. It could be any consultant, if the word professional is there. That's just a comment; I'm not expecting a response.
We have one more question on this: does this particular board have a monitoring function as well? As the minister explained earlier, the Forest Practices Code has a number of functions: sustainability of the forest, sustainability of a healthy environment, sustainability of the communities and sustainability of jobs for the people working in the forest. That is the motivation behind all that the Forest Practices Code implements. Does this particular board play a role in monitoring the results of all the elements that make up the Forest Practices Code, and how do they deal with that?
Hon. D. Zirnhelt: The staff of the board will, basically, through its audit program, go in and look at whether there is compliance with the code. They know the code, they go out and look at the practice, and they assess how well people are meeting the objectives and standards of the code.
T. Nebbeling: I didn't ask that. I don't want to know if this board is responsible for making sure that everybody sticks to the rules. I'm more interested in what the role of the board is -- or, if that is part of their role, what the goals are. Does the Forest Practices Code mechanism -- the enforcement of the Forest Practices Code -- achieve these goals that I just described, be it for the environment, be it for the sustainability of the forest or be it for the sustainability of the economic well-being of communities?
Hon. D. Zirnhelt: The role of the board is to oversee just the forest practices, really. They don't get into socioeconomic viability or impact analyses or anything like that -- simply how harvesting and silviculture and forest management practices are carried out.
T. Nebbeling: You mean how silviculture and harvesting are carried out according to the Forest Practices Code. What happens if it clearly has a very negative impact on the well-being of the communities? What does this board do? Do they just ignore the social well-being of the communities, of the people who work in the forest? There must be something that's within the responsibility of the board, I believe -- since they are the monitoring agent for the elements that make up the Forest Practices Code -- to make sure that that particular element, which I think is crucial, is not ignored for the sake of, "Well, we're holding our ends to the demands that the Forest Practices Code makes when it comes to harvesting practice, to silviculture practice, to rejuvenation" -- you name it. What trigger will that board use -- even though they are not necessarily responsible for doing the assessment of the social and economic well-being of the community -- to make sure that that component is being taken care of?
Hon. D. Zirnhelt: Such a complex socioeconomic function is really what is provided by government. It's government's role to make those assessments. To some extent, the chief forester has a role when he determines cut levels. I guess you'd have to say, with respect to sustainability of communities and sustainability of forests, that it's one and the same. Without a healthy forest, we won't have healthy communities in the long run. The board has a role in monitoring the biological-physical side of the forest sustainability question. A linkage would only come through ministries. The pressures on district offices, the pressures on MLAs and ministers and so on to, allow the conduct of forestry come together at the political and government level. Government has to look at all the various factors, including measures of sustainability.
I think what you're asking for is a role that can be played at the community level. Through forest renewal, we're looking at planning for sustainability, planning for change. I think there is a role that communities can play -- and do play -- through local economic development commissions, and so on. But the linkages aren't structured, and there is no necessary connection between the Forest Practices Board and any other function of government. They do report, it's public information, and the Minister of Forests will read it -- and I'm sure you'll read the reports that come out, if they're germane to your areas of interest. As critic, you would read them.
I guess the debate about socioeconomic sustainability is something we conduct throughout society. It's a much more complex function than the particular task asked of the Forest Practices Board. They're just asked to report, watch, monitor, audit and review complaints to ensure that the rules that society has put in place through the Forest Practices Code, the law and the regulations are adhered to. I'd just say that their role is biophysical.
T. Nebbeling: I'm a little bit surprised that this particular element doesn't seem to be, in any way, shape or form, part of the consideration, because
Hon. D. Zirnhelt: They haven't been set up as a mechanism that reports to the minister. But clearly, I would read every report, and they may make recommendations in their independent reports to change forest practices. They might argue that the code does not lead to sustainability or that it's so harsh that it might lead to a suspension of forest harvesting activities.
T. Nebbeling: Hon. Chair, I would really appreciate it if you could ask that the meeting be held in another room, because I haven't heard a word of what the minister said. I will have to ask him to repeat his answer.
The Chair: Sorry, hon. member. Hon. members, the point has been raised that people are having trouble hearing, so holding conversations elsewhere would be helpful.
Hon. D. Zirnhelt: The member asked about whether the board reports on practices, on adequacies or inadequacies of forest practices, to the minister; they report publicly. The Ministry of Forests would digest the reports and point out flaws in the regulatory regime, in the guidebooks or in practices, and it would suggest improvements. It's designed to be in the public domain, so there could be public debate about the adequacies or inadequacies and how practices are being carried out. I
[ Page 1250 ]
think it would inform public policy just by its existence, if their findings could be taken and implemented. I fully expect that they will report publicly, and any public report on forestry matters is something the Minister of Forests would have to take into account in deliberations about where government's going, where industry's going, where the economy's going and where our biophysical practices are going.
T. Nebbeling: As there have been a number of audits done in the past year, when were these reports made public? When were they available for public scrutiny? I have not seen one report; I have not heard of one report. What mechanism is used to make sure that, indeed, the public gets an opportunity to look at the recommendations that will go to the minister?
Hon. D. Zirnhelt: There have been no audit reports yet from the Forest Practices Board, just their annual report which was tabled here a week ago. You may be confusing this with some of the audits that companies may have put out. Sometimes non-governmental organizations do their own audits and call them audits. None under the Forest Practices Board have been done yet.
T. Nebbeling: I am reflecting the statement made by -- I'm trying to find the name of the chairman -- Keith Moore that of the 32 public complaints the board has audited, 11 are still open files. What process has taken place to let the public know how these so-called closed files were dealt with, in view of what the minister has just said -- that everything is done through a public process. How come the ministry has seen these reports without, I believe, the public reporting having happened?
Hon. D. Zirnhelt: We're now moving from the audits into investigations. That is what he's commented on: investigations that have been taking place. When an investigation is complete, the board reports to the parties that are involved. Those are available, but there's no repository other than the Forest Practices Board itself. They keep them; they're available, but it's not as though they send them to every newspaper or anything. They are public reports, but they aren't available until the board has seen them and the investigation is completed and closed.
[5:45]
T. Nebbeling: Because of the different approach to what the board is doing, it's becoming almost impossible for me to determine when it's actually doing an audit and when they have an investigation, and what the consequences are. My concern is that there seems to be a lack of that
Hon. D. Zirnhelt: The government set this up to be a watchdog, and we don't expect the public themselves always to be watching. There's somebody watching on behalf of the public. That's the first thing I have to say. I'm sure that any of those completed reports can be made available to anyone. But if there is a report that has a negative consequence for a community or a company, and therefore their employees, I'm sure they'll know the investigation is going on, because they would have been party to it.
Not so of an audit, because audits are independent and at arm's length and, by nature, not particularly public. If there were an audit or an investigation of a practice next to the community of Whistler or Squamish, people would know about it, and they could ask for the report and make their own judgment about the adequacies of the investigation. I don't think there is anything at all
Perhaps we can supply you with some of the reports. I'll ask the board to give you what's been published, and some indication of who has picked up these reports, and you can look yourself. My guess is that the logging, for example, will have been done. But if there's a particular logging practice in a particular type of zone, and there are implications that you can't meet the objectives of biodiversity and still log in those areas, then that may mean that we have to rejig the code in some way.
We've made an overall assessment, as I said in my opening remarks, that there could be a 6 percent effect on the allowable cut by the code. That's all factored into the code, and I would expect that the investigation of complaints would find that we're managing to that objective. So the cumulative impacts that would really be of significance to a community have been factored into government's considerations around the code.
I feel that you have to push economic diversification within the sector and within the economy generally, and use the mitigation structures that we have, like Forest Renewal, to pick up the slack. I think we've had a holistic view of the impact of the code; government, with all its legs and arms, has really embraced an overall view.
T. Nebbeling: What kind of funding does this particular board have? First of all, what kind of funding was budgeted for?
Hon. D. Zirnhelt: The budget for the Forest Practices Board is $4.3 million, and they have a target of 26 full-time-equivalent staff.
T. Nebbeling: What was the budget last year?
Hon. D. Zirnhelt: The budget last year was $2.29 million, and there were 11 FTEs. My guess is that they probably didn't reach those targets.
T. Nebbeling: So that money, that surplus, has come back into general revenue -- or is that just staying there? What happens with that money? Obviously they have not hired the people that they were supposed to under the formula.
Hon. D. Zirnhelt: It's like any line expenditure. If it's not expended, it doesn't become part of the accounts in the end. In effect, it goes back. They lose it; it's not carried forward.
T. Nebbeling: How often has the board met since, let's say, last year? I believe they were incorporated in June.
Hon. D. Zirnhelt: I'll try a general answer. They have two-to-three-day meetings more than once a month, on average. So they meet four to six days, maybe more, per month.
[ Page 1251 ]
T. Nebbeling: So it's about 80 days in total since June last year.
Hon. D. Zirnhelt: I would have to get the numbers, to be accurate. But that would be in the ballpark, I'd say -- 60 to 80, in that neighbourhood. I do know that the board itself, in these early stages, has to talk about staffing to get up and running. We didn't provide them with a blueprint for the mechanism; they helped design the mechanism.
It's a very good and hard-working board. They've been hands-on. They want to get it right. They're all excited about this task. It's a varied board, and they've been trying to reach as much consensus as they can on very tough subjects. It's agonizing to go through and make these kinds of very difficult technical assessments. But getting the infrastructure up is a task, as any new organization is.
T. Nebbeling: There were six members who were appointed, I believe. Then at the time this board started to function, they had six inspectors, or whatever title you gave those people. That was in place at the time it started, I believe.
Hon. D. Zirnhelt: No, they didn't start with six investigators. The board was appointed, and then they began to advertise and look. I think a few people were seconded. It took some time to hire them, so they haven't
Hon. J. MacPhail: I move that the committee rise, report progress and ask sit leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. J. MacPhail: I move that this House stand recessed until 6:35 p.m. and then thereafter sit until adjournment.
Motion approved.
The House recessed at 5:55 p.m.
The House in Committee of Supply A; W. Hartley in the chair.
The committee met at 2:36 p.m.
On vote 22: minister's office, $374,615 (continued).
C. Hansen: When we first started these debates on the estimates last night, it was after a long day and we were perhaps a little tired. The minister was probably anxious to get into the meat of the debate and the specific issues, and as a result, he dispensed with his opening statement. In the interim I discussed that with some of my colleagues who have more experience in this House than I have, and they were quite surprised that the opening statement was dispensed with.
I think the whole purpose of these debates is accountability and an opportunity for us to try to bring certain issues to light. A very important part of that accountability is the opening statement. It puts into context the minister's perception of the ministry. It's a ministry that's gone through some very dramatic changes over the years. It's a ministry that does not yet have an annual report. I think that opening statement is very important. I wonder if the minister would reconsider. Perhaps it's a good way to start the afternoon.
Hon. D. Miller: I hadn't realized the importance of the statement. Unaccustomed as I am to public speaking, I'd be happy to read it into the record. Essentially, it's a bit of an overview and some details.
The ministry's mandate is to develop and diversify B.C.'s economy and facilitate creation of long-lasting, well-paying jobs for British Columbians. The tools, as I indicated broadly in my talking yesterday, to reach this goal include capital infrastructure, regional economic growth, trade, investment, traditional industries like energy and mining, high-tech and value-added industries, and Crown corporations, especially B.C. Hydro, B.C. Rail and B.C. Ferries.
In the past four years the primary focus of the ministry has been the necessary, affordable investments in B.C.'s infrastructure. We essentially have had to play catch-up in that regard. There had been, I think, quite a long period of time where the necessary and ongoing investment had not been made. That led to quite a deterioration in the infrastructure base. We were witnessing that right around this province in terms of the communities, their traditional water and sewer infrastructure, transportation, etc., and we've moved very quickly to try to meet that.
A few of the key projects around the
The Vancouver Island Highway project -- again, we talked about that -- is a $1.2 billion project. Thanks to the unique arrangement we came to -- the accord -- 90 percent of those jobs went to Vancouver Island residents, a fact, I think, that is greatly appreciated. Century-class ferry construction: $35 million for two vessels; 160 jobs. The Westview interchange -- again, innovation -- is a design-and-build project: $32 million, a saving of $3 million compared to traditional construction methods and a shorter construction time. By way of innovation, again, the first in this province: the Mission joint-use school facility, a project that I had a hand in as the minister responsible for post-secondary education. There's a $23.8 million secondary school-college-child care facility, with spaces for more than 700 secondary students and 750 University College of the Fraser Valley students. It enables 420 sec-
[ Page 1252 ]
ondary students to move from portable classrooms to new classroom space. Again, that debt that we're talking about is the abstract debt that the Liberals are particularly fond of talking about.
We introduced the B.C. Ferries ten-year plan: a new terminal -- by the way, a wonderful new terminal -- and connector roads to the Island Highway at Duke Point in Nanaimo. I was quite struck by the fact that the candidate for the Liberals up there, the mayor of Nanaimo, was dead set against debt -- spoke against it, I believe. When I asked him if he was in favour of this project -- $100 million of the taxpayers' money -- he said: "Absolutely." So he seemed to suggest that he likes spending money in his riding but nowhere else.
B.C. Hydro upgrades: Resource Smart projects aimed at installing additional capacity at existing power generation stations -- some comment about that may come up; B.C. 21 Power Smart, for job creation and water and energy efficiency -- $20 million; energy audits for 80,000 homes, creating 500 jobs.
We're really proud of our success, Mr. Chairman. By doing this, I think we've supplied the necessary catalyst for private sector investment. Now is the time for the private sector to make investments to build up B.C.'s economy and create even more high-quality jobs. We like to work in partnership -- I mentioned that. It's a very key thing, in my view, with respect to any economy: the ability of government and industry and trade unions and others to work in partnerships, like at the Huckleberry Mines project. I believe there's a Mr. Lanigan who is a constant critic. In fact, that may be the only job he's ever held in his life -- a critic. He's opposed to the fact that we entered into a commercial arrangement with Huckleberry Mines -- a $15 million commercial loan. We'll get a return on that money. What will result is a mine -- 180 to 200 full-time jobs, about a $200 million wage bill annually to local residents. That's not bad up in the north.
There's Royal Oak Mines -- over 550 direct jobs and 1,000 indirect and induced permanent jobs for the next 20 years; Newbridge Networks, which we touched on briefly last night -- 75 new high-tech jobs; the Dynapro Systems plant expansion, 100 new high-tech jobs; Quinsam Coal Corp. and Marubeni Corp., for Quinsam mine expansion, 100 new jobs -- in fact, an $11.1 million investment in B.C.; G.E. Canada, with B.C. Hydro -- a ten-year agreement, approximately 1,800 person-years of employment and an industrial benefits package totalling $150 million for British Columbia.
Looking at the area of regional economic growth, over the past ten years we've really worked hard -- or I've worked hard, as an active MLA -- in northern British Columbia. We have some peculiar challenges there. We're committed to stimulating the economy throughout B.C. and to strengthening regional economies, from northern B.C. to the Okanagan and the Kootenays.
Over the past few years, our economy has performed with great success. Exports are up 80 percent since 1991 -- I think 77 percent is the dead accurate number, rounded off; 177,000 new jobs in the past four years, one-third of the Canadian total; 43,000 jobs since December of this year; the gross domestic product is up 13 percent since 1992 and is forecast to be amongst the leaders again in 1996. At the same time, we are enjoying the lowest per capita debt and the second-lowest taxation rate overall in Canada. So we really have used the infrastructure development and other programs to develop one of the stronger economies in this country.
[2:45]
Going on to some of the investments made by the private sector in the regional economies, I guess there's some evidence of faith that there are opportunities for the private sector: Trans Mountain Pipe Line Co. Ltd., $30 million -- $21.4 million in B.C. to build oil-pumping stations along an oil pipeline from Edmonton to the lower mainland; Novagas Clearinghouse Ltd. constructed $30 million worth of pipelines and related metering, treatment and processing facilities 145 kilometres northeast of Fort Nelson; Ecosign Mountain Resort Planners are developing a $65 million mountain resort at Tod Mountain near Kamloops; Morrison Petroleums Ltd. -- a proposed $48 million gasfield development, including drilling 20 to 25 wells and building permanent roads, pipelines and a natural gas plant 100 kilometres northeast of Fort St. John; International Skyline Gold Corp. -- proposed development of a $130 million mine in the Iskut Valley just north of Stewart; Westcoast Gas Services, a $48 million proposed natural gas processing facility in Jedney and a 26-kilometre pipeline to connect the plant to Westcoast Energy's main pipeline system; and Solex Development Co. has a proposed $20 million expansion for its liquid natural gas plant in Taylor.
We will continue to invest to ensure that B.C. remains a good place for private sector investment, by implementing an industrial strategy which will cross all sectors. Again, I think I touched on all of these issues last night. We'll continue to develop our infrastructure.
On B.C.'s traditional industries, I spoke at length about efforts or initiatives in the forest sector. Technological change and the need to be competitive have changed the way business in these industries is conducted. Quite frankly, my view is that by adding knowledge, essentially, to our primary industries, we can create new opportunities and stabilize them even more.
The ministry is responding to the challenges by extending its mandate to include rejuvenation of traditional industries. To breathe new life into these economic powerhouses, we will replant the seeds that would lead mining and energy sectors into new growth and prosperity. I've touched on some of those specific projects. We'll be doing this by implementing a five-year $100 million program of tax relief and exploration incentives for the mining sector, which were identified in the '94-95 provincial budget; launching Explore B.C., a $3.5 million program of mineral exploration incentive grants, to revitalize exploration; and working with the Advisory Council on Mining to develop new standards for mineral exploration management and examine value-added opportunities for the mineral sector.
We've worked very well, I must say. I think some special praise goes to Doug Kerley, the job protection commissioner, for the work that he has done. I don't know if we have any statistics -- no, I don't -- but reviewing some of the work and the statistics just recently, it's very clear that the job protection commissioner's office has been instrumental in maintaining numerous private sector companies and in maintaining jobs in this province. He certainly deserves plaudits from everyone.
Expanding new high-tech and value-added industries. We're also aware, as I said, that diversification is necessary to ensure that our economy remains successful, and we are promoting the expansion of new high technology, advanced manufacturing and value-added industries in B.C. The value-added sector does contribute to stronger new jobs and also stable jobs.
I talked about adding value to the mining and wood products sector. I talked about trade, so I think I'll just skip
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over that. We had a fairly extensive discussion on trade during the estimates last night. Just looking over my notes, Mr. Chairman, I think the rest of it is typical speech notes. I think I've hit the important issues with respect to what has happened in the past and our sense of direction.
Oh, we have some statistics on the job protection commissioner here. Since its startup in '91 the JPC has helped to save 28,671 jobs, through working with the private and public sectors in terms of economic plans. In '95 the commission helped maintain more than 700 jobs, and it has active cases involving a further 7,800 jobs. So we really see that it has been an invaluable service in terms of helping existing industries be maintained, stabilized and ongoing. That's not the complete speech or text, but I think I've given enough. I hope that's really what the member was looking for and that it's been helpful.
C. Hansen: I think those opening remarks are important, because they give a perspective on the priorities within the ministry and on the things the ministry feels are important initiatives. We can ask a thousand questions that draw out specifics on some very minute issues which may or may not be priorities on your desk. I think the opening comments set out very clearly what you and your senior officials see as the objectives and the track record of the ministry. Obviously, whoever wrote that did a good job. I'm glad I asked for it to be read into the record, because I think it's a tribute to whoever put those notes together. They deserve to be read in.
Off the top today, I would like to pursue a couple of the issues pertaining to the general operations of the ministry. What I did last
I know we touched on the corporate capital tax last night, but when you mentioned those two issues, the whole subject of the corporate capital tax came back to me again. I did bring along today the Budget 96 Reports that I tried to quote from memory last night. The actual quote is: "The main criticism of the CCT is that it is payable regardless of whether a company is profitable, reducing the competitiveness of British Columbia in attracting new investment." It then goes on to say: "Partly offsetting this perceived disadvantage is that CCT is deductible for corporate income tax purposes." As I understand it, that deductibility is soon to be eliminated; therefore this offsetting measure is soon to be eliminated, leaving just the corporation capital tax as a major disincentive to investment in this province.
The companies I've talked to that are involved in the value-added sector of the forest industry feel that this is a very important item that discourages or impedes their ability to invest in the technological change that is necessary. I'm sure my colleague from Richmond East, when she's talking about science and technology, is hearing a lot from those companies about the fact that the corporation capital tax is a major problem for them. Because you can only create jobs in those industries if you're prepared to put an enormous amount of capital into technology and changing equipment.
In the value-added forest sector, which I know is dear to the minister's heart, we have seen an increase in the number of jobs, but the increase has come as a result of technological change. It's not a case of the classic battle between labour and capital, as if it were a zero-sum game. In the value-added sector of the forest industry, it is only by adding equipment that you can, in turn, provide the jobs.
The examples I have seen of companies that have started
I know we canvassed this last night. I'm not going to ask the minister for any more comments, unless he wishes to. It became, obviously, a partisan issue during the election campaign -- the issue of the corporation capital tax. I implore him, on behalf of those companies that have the ability to create jobs in this province, to take a second look at the corporation capital tax, as the former Premier was doing prior to his resignation.
Having said that, I mentioned last night that I found that the web site, which had been set up by the ministry in the absence of an annual report, was a useful primer to me. This morning I was going through that to see if there were any issues that I had missed. I do want to ask the minister about some specific items that are raised in that web site. One is the PRIDE Centre that was set up in Vancouver. My understanding is that program has now been wound down, with limited success. I wonder if the minister could comment on whether that program has completely wrapped up or whether there are any ongoing activities; and, while it may not have reached the numbers that were hoped for, on whether there were lessons that were learned from that process that could be applied to the future.
Hon. D. Miller: I hope my staff can find me some statistics.
I want to completely refute what the member has suggested. The program that was put together -- and again, I was part of it through my old ministry -- was an unqualified, absolute success. I think your leader discovered that during the campaign. There were some clips, I recall -- if it's the same issue we're talking about -- of the training with Mr. Green. It really is too bad that when there are attempts made to try to change what arguably are pretty bad social conditions and give people opportunities, you get this kind of chronic complaining about it, rather than people taking a close look and seeing the positive side of it.
Essentially, the government determined, because of some investments made in Vancouver -- GM Place, the Ford Centre for the Performing Arts and the Four Corners Community Savings -- that it might be entirely appropriate to see whether or not a training program could be put together to give residents of the downtown east side an opportunity to get the kinds of skills they needed so that they could be employed in some of those enterprises. I don't know if the member opposite supported that goal or not, but that's what it was.
In fiscal '95-96, the PRIDE Centre was funded jointly by the Ministry of Education, Skills and Training with $750,000; by B.C. 21; by Human Resources Development Canada, to the tune of $103,000; and by the Vancouver-Sunshine Coast Aboriginal Management Society, to the tune of $114,500. So it was a partnership between various agencies -- federal, provincial and aboriginal. The PRIDE Centre provided valuable job training for 237 inner-city residents; 172 graduated.
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One hundred and thirty PRIDE Centre trainees landed jobs at GM Place, the Ford Centre, Four Corners and elsewhere. I think the results -- given the area, given the issues that those people have to deal with in their daily lives -- were outstanding.
PRIDE Centre training was developed by professionals in the industry. It included SuperHost training, Serving It Right, cash handling, personal presentation, communications, anger management and conflict resolution, as well as a banking services course for participants in Four Corners. Training was completed in January '96, and PRIDE Centre closed at the end of the '95-96 fiscal year, after offering support for graduates for a two-month period. It was an unqualified success. Certainly the people who were able to avail themselves of the training opportunity, who are now working instead of depending on social
C. Hansen: I was surprised at the way the minister started his answer to this question. He talks about chronic complaining; he talks about not looking at the positive side. I think if he goes back and reads my question, he will see that there were no complaints in it; there was nothing negative. I was asking the minister a question, which I think is what the spirit of the estimates is all about. I was surprised at the tone of his response. I wasn't criticizing the program; what I was saying was that I know that when the program was first announced, there were much higher targets set for it. That's not to say that there weren't benefits coming out of the program. My question was whether there were any aspects of the program still going on and whether there were lessons learned. I think he did eventually answer that side of the question.
Perhaps the minister could tell us what the original target was when the PRIDE Centre was first announced. The other part of my question was whether or not there are any aspects of the program still underway.
Hon. D. Miller: Mr. Chairman, if I exhibited some passion with respect to that, it's because during the recent election campaign, the leader of the Liberal Party of B.C. went on television and denounced the training program as a failure. In doing so, he did what is commonly done by politicians: he failed to check his facts. Perhaps I can establish the record; I think it was well clarified during the campaign. I think the Leader of the Opposition suffered a bit of a blow by coming out ill-informed and attacking this program.
[3:00]
When the program was launched, I indicated the rationale for it, in that the developments that I mentioned were about to take place -- the Ford Centre, etc. -- and that we anticipated that a thousand jobs would be created as a result of those enterprises locating in Vancouver. The targets that we
My quarrel with that -- and why, I suppose, I get somewhat heated -- is that it's all too easy to launch an attack on these kinds of programs, and it's very, very difficult for people to respond. What people remember mostly is the attack. I don't know if the member knows the downtown east side. I don't know if he spends time there. I don't know if he knows the conditions that people live in there and how important these kinds of programs are. To make some wild accusation, ill-informed, for some perceived political gain is irresponsible, and that's why I get mad about these things. These are difficult to do. We've got significant challenges in this province, not just in the downtown east side but in other areas. So I react against that way of dealing with questions, and I apologize to the member for assuming that his view was perhaps the same as that of the Leader of the Opposition. I don't mean to cause offence but am just explaining why I got a bit hot about events that transpired not so long ago.
C. Hansen: I'm not sure that estimates are the time to get into heated partisan political debates, no matter how restrained we try to be. If the minister wants to talk about misguided attacks that were made during the election campaign, for every one that he can bring up, I can certainly bring up ten more, and it might make for a very long, drawn-out afternoon. I think there are an awful lot of people in the business community generally that were feeling rather bruised by the NDP during the election campaign because of the scurrilous attacks that were made on the business community generally and on the people that create jobs in this province.
Now that the election is over, we have a party in government that's trying to create the impression that they're great friends with the business community -- they're open to all sorts of consultations. It's an argument that I think the minister would be ill-advised to carry to great lengths this afternoon, because it would probably draw this process out considerably.
There is one more point that I want to ask about regarding the PRIDE Centre, because it was in the spirit of my original question, if we can get back to that. I asked whether there were any ongoing activities in that program. I agree with the minister that there is an enormous lack of opportunity for people who are in the downtown east side of Vancouver. I have spent time in the downtown east side, and I know the plight of some of those individuals. I know the challenges that are faced, which are probably far beyond what we can deal with no matter how well-intentioned we are and how much money we have. Certainly we can never stop trying.
My question is: given the need for training programs and the great value of the PRIDE Centre, as the minister reminded us, is it an ongoing program? If it's not an ongoing program, are there similar programs that will take its place in the downtown east side?
Hon. D. Miller: Perhaps we can sort of establish a footing. It's not a schoolyard, so I'm sure we can all get along famously.
Interjection.
Hon. D. Miller: One thing I never complain about is who started it. I just like to scrap.
I think I did say in my response that the training was completed in January '96 and that the PRIDE Centre closed at the end of fiscal '95-96, after offering support for graduates for
[ Page 1255 ]
a two-month period. I'm not certain of my ground here, but it may be still running as a non-profit. In terms of our funding, it ended at the end of the fiscal year.
C. Hansen: I'd like to comment on one issue regarding the initial funding for the PRIDE Centre. I guess I'd better say that it's a rumour that's going around, and maybe the minister can correct the record on this. There is a rumour going around that the establishment of the PRIDE Centre in Vancouver resulted directly in a funding cutback for the Picasso Cafe in Vancouver. I'm sure that's not true. The Picasso Cafe is an organization that has great support, I think, through a broad cross-section of individuals in Vancouver. I'm just wondering if the minister could comment on what was perceived to be a diversion of funds and whether or not there's future funding for the Picasso Cafe.
Hon. D. Miller: No, it's not true. Mr. Chairman, again with your indulgence, because this clearly falls under the Ministry of Education, Skills and Training, but I have some knowledge of
We redesigned them with stakeholder feedback and involvement. We developed a range of new training opportunities to fit specific categories -- life skills, youth -- and went to all of the current societies, whether they're non-profit or private for-profit trainers. We had thorough briefings on all of the new programs and advised them how to bid on the new programs. The Picasso
I think there were some questions as
We did a lot of those kinds of audits and analyses, because we wanted to make sure that with scarce dollars -- particularly with the federal government vacating the field -- we were getting the maximum value and the maximum benefit for the money being put into these training programs. We were confident that what we designed was better than what was. As for any statistics, I think I've strayed too far into another ministry's domain.
C. Hansen: The measurement of outcomes of some of these programs is something that's of great interest to me. In the debate on Youth Works -- which, I appreciate, is under another ministry, but just to make an example -- I'm concerned that the measurement of the success of the program is the number of training spaces as opposed to the number of individuals who are employed down the road. My concern with some of these programs is that when we're measuring success, we have to look very carefully not at part of the process but at what the long-term outcomes are. I appreciate the comments that were made by the minister, because I think it's in that spirit. We certainly agree on that as an important outcome.
I want to shift a few pages through this document. I gather that the ministry is responsible for the province's investment in the TRIUMF research facility -- and I apologize if I'm encroaching on my colleague's turf here. There's a $9.7 million investment in the upgrade, and I wonder if the minister could comment on the status of that and on whether funds have been disbursed. What I'm most interested in is where those funds are coming from. Which pot within government is that money coming out of?
Hon. D. Miller: While I'm waiting for some information, Mr. Chairman, I will again respond very briefly to the Youth Works question, because I think it is an important point. When we looked at designing those programs, one of the things we did was go to the private sector. We've announced several Youth Works initiatives. Here on Vancouver Island, for example, the program is with a consortium of high-tech companies, and what they were proposing and what we've agreed to is on-the-job training. I like that model. In fact, I almost like it better than the institutional model, because people get practical hands-on training. They're employed. They receive a paycheque. They learn those skills, and they also learn the discipline of the marketplace in terms of having to show up for work, etc.
Those are really the programs that will pay the biggest dividends. Not to denigrate or slight in any way the institutionally based training at colleges, etc., but it seems to me that on-the-job training is absolutely the best way of dealing with people who are having difficulty, and in particular with those who have gotten stuck on social assistance and really need that kind of opportunity to get off.
I'm advised that construction is underway on the TRIUMF facility. Last year, the funding came from the science and technology fund. In subsequent years, it will come from capital.
C. Hansen: My colleague from Richmond East may wish to pursue that subject, as well, when she has the floor later.
There's a reference here to action plans that are being developed. I will just read the quote: "...action plans for jobs in sectors like environmental technology, energy and tourism." The minister has talked about environmental technology; we've talked about the tourism sector. Energy is not something we have discussed in a specific way, and I wonder if the minister could explain to us what's anticipated in terms of an action plan in the energy sector. This is talking about initiatives of the government, and we're talking about action plans for jobs in sectors like environmental technology, which I'm aware of, as well as in energy and tourism -- and tourism I'm aware of. I wonder if the minister could fill us in on action plans for jobs in the energy sector.
Hon. D. Miller: I thought I dealt with that, Mr. Chairman. I thought a read a whole list of things. Let me check. I did touch on some. Just to reiterate -- and this isn't a comprehensive list at all, but some of the projects -- I mentioned the gas initiatives that are taking place in the northeast. I mentioned G.E. Canada, with B.C. Hydro -- a ten-year agree-
[ Page 1256 ]
ment and a $150 million investment in B.C. There are a couple of independent power projects that were announced prior to the election: Revelstoke and Prince George. There are others that are going through a planning process now, and there may be further announcements at some point in the future.
We'll see if we can get some others. To run through them very, very briefly -- and I can certainly try to respond to specifics: Canadian Forest Products, the Intercon IPP project; Canadian Hydro Developers, the Pingston Creek project. Look at some of the numbers attached to investments, for example: the first one, $93 million -- construction employment, 163 person-years; negotiations are underway with Hydro; Canadian Hydro Developers' Pingston Creek investment, $29 million -- that's under review; CU Power, the Port Alberni co-gen that's subject to a panel that we've set up to examine some of these IPPs; again, Fletcher Challenge here on the Island, similarly. Those are very large potential investments -- Fletcher Challenge, for example, is $237 million.
[3:15]
There's a long list of these: Alberta Natural Gas -- again, a natural gas co-gen plant, 170 megawatts, an investment of $150 million, and the proponents are currently looking at markets; I think the Revelstoke issue is experiencing some delays with respect to environmental concerns; Columbia Power Corporation's Keenleyside IPP hydro plant for 220 megawatts -- the existing dam. There's Cominco's Waneta upgrade, the IPP runner and generator replacement -- there are some fisheries concerns at the present time -- $54 million in construction value. So there's a range of projects: some that have been given the green light; some that are in negotiations with Hydro; some that are subject to the review panel process we put together; and the pipeline and related activity in the northeast.
C. Hansen: Last night, in response to one of my questions, I think we may have got confused between projects and programs. I don't mean to split hairs, but in the context of environmental technology, I recognize that there is a program in place which in turn provides for several projects under that umbrella; and, I gather, within the tourism job strategy, there is a program there that will in turn lead to projects. I appreciate the list of projects, but is there a comprehensive program, for example, for a job strategy into which these projects fall? Or are the projects themselves, when taken
Hon. D. Miller: I think I get the drift of the member's question, but the energy sector is
C. Hansen: Pushing through with the stuff from the Internet site, the ministry press releases are included there. I would like to start with a comment on one of them that caught my eye that verges on being superficial. There was a press release that came out on June 20, talking about a particular project -- a symposium that was held in Kamloops. There was a quote from the Kamloops MLA. It struck me as being inappropriate that that title was used in connection with the MLA before she was in fact sworn in as a member of the Legislature.
I guess it was at the end of April that a press release came out with regard to the minister's concern regarding a $5 million loan that was approved by the Saskatchewan government to a B.C. meat-packing plant. I wonder if the minister could give us any update on what may have happened on that.
Hon. D. Miller: Certain information came to light -- actually, from the media -- that could indicate that the province of Saskatchewan had in fact job-poached. We dealt with that issue yesterday, with UPS -- United Parcel Service -- in New Brunswick. Upon receipt of the information, I wrote to the minister, Mr. Lingenfelter, in Saskatchewan, asking that certain information be conveyed back to the British Columbia government. I wasn't making a charge. I wanted to be clear that without solid information, I wouldn't make that allegation. I believe we're still in the process of exchanging information at the bureaucratic level, but it had to do with an offer made by the Saskatchewan government to the meat-packing operation. That appeared to us, from the documentation we saw, as an attempt to job-poach. It's not at any stage that I can inform the member; there's no conclusion at this point. We're still exchanging correspondence and conversations with the government of Saskatchewan. When we have something to report on that, I will.
C. Hansen: I gather from the press release that the minister -- I'm just reading on here -- had written to the Saskatchewan Economic Development minister, Dwain Lingenfelter, and asked for more information. Do I take it from your response that there has been no response to that yet, directly to you -- or is it strictly through the officials?
Hon. D. Miller: No, I didn't say that; I did say that there has been no conclusion that we've reached with respect to the issue. Therefore I'm not going to, and I didn't at the
C. Hansen: Does the minister anticipate any particular time line as to when we may have the information he feels is necessary to proceed?
Hon. D. Miller: Shortly. I don't know what that exactly means, but we might see it in the next month or two.
C. Hansen: I think that wraps up what I wanted to ask with regard to these particular documents. I'll defer to my colleague.
S. Hawkins: I just have a couple of issues to canvass with the minister. The first one is with regard to a capital project that I don't find anywhere on the frozen list or the review list.
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It's with regard to a $1-million-to-$2 million upgrade to Kelowna General Hospital so it can service the cancer clinic that's currently being built on the site. This contract includes such things as a loading dock, biomedical plant engineering space renovations and adequate garbage disposal facilities. I'm wondering if the minister can tell us what the status of this contract is, since neither the hospital nor I can find out.
Hon. D. Miller: Mr. Chairman, really, if I had the answer here, I'd give it. But I think, technically, capital projects under a certain ministry should be dealt with by that minister. I know that we do have the consolidated capital plan. That's more of a process. I'm not the Minister of Health; I'm not involved in their facilities branch. We look at bringing the work of those facilities branches under one umbrella in terms of the capital plan. The review that's currently taking place is under the Minister of Finance.
S. Hawkins: Just on the record, then. It's sad that the minister can't give me the answer to that, since we're going to have a cancer clinic that's not going to be able to be serviced. So I'm wondering what the point of building a cancer clinic is if we can't provide services to it.
There is another project, then, in the same vein. In Hudson's Hope the hospital burned down. It's kind of interesting that this is not a new, improved hospital being built; it's a hospital replacement that was put on the under-review list. The community is desperately trying to recruit a doctor, and I understand that the community is being provided health care services from the basement of a municipal building. I wonder
The Chair: Excuse me, member. I think
Hon. D. Miller: Point of order, Mr. Chairman. The fact is that the member, with all due respect, knows the estimates process, or ought to, and knows that certain questions relative to certain ministries should be asked of that particular minister. That's not too challenging, I don't think, for the member. If there's any particular problem in pursuing that, perhaps the member might see me privately, and I'll do what I can to assist.
The Chair: Thank you, minister, for that point of order. That was the point I was going to make to the member, not meaning to interrupt her. But that is sage advice.
C. Hansen: Hon. Chair, if I can interject, I'd like to clarify, on this issue, exactly when the appropriate time is. Last night, if I can just read from the Blues, I said: "I would like to seek the hon. minister's advice as to where the appropriate ministry is to discuss the specifics of some of these projects; whether it's in fact during these estimates, or whether it's more appropriate to address it to the Minister of Health or the Minister of Education at those appropriate times." The minister responded, "I think it's timely now," at which point somebody hauled out a very large binder of information. I, quite frankly, was surprised at the minister's answer last night. My main reason for asking it was to make sure that we didn't pass up the opportunity to ask about the specifics of these projects.
The Chair: Excuse me, member. Could you take your seat, please. We've just made a decision in regard to the statement you're making, so there's no further discussion on that.
L. Reid: Well, what's changed in 24 hours? That's the question.
The Chair: The decision was just made.
C. Hansen: Hon. Chair, I would like to ask the minister to give us some guidance on the parameters of the debate regarding B.C. 21, Build B.C. and the capital projects secretariat within his ministry that he feels are appropriate for the debate on these estimates.
Hon. D. Miller: Mr. Chairman, with all due respect, sincerely, I'm not trying to not be helpful, but there are appropriate rules with respect to canvassing issues. If this were to be the opportunity for any member to canvass issues around capital projects, then surely we would not be doing a service to the estimates.
I overheard some of the debate on the estimates of the Ministry of Transportation and Highways; I came into the room. Routinely, members opposite were asking about specific capital projects funded through the Ministry of Highways. That's not to say that we did not get into a discussion; we did, quite properly, talk about the consolidated capital plan and what we were attempting to do in gaining efficiencies. We had quite a discussion, so there is a distinction. I say this respectfully. I'm not trying to be obstinate or not respond to questions. I'm sure that in other capital ministries the members are asking questions of that particular minister -- whether it's educational facilities or you name it.
Therefore I think it's entirely appropriate that if it's a Health issue, it be canvassed with the Minister of Health and that if it's an issue around, for example, a new correctional facility, it be canvassed with the Attorney General. I think that makes sense, and I hope the members will accept that response in the spirit it's given.
C. Hansen: I'm not taking issue with the approach the minister is taking today. As I say, I was surprised at the response he gave me last night. I'm very much aware of the fact that the capital projects under the Ministry of Transportation and Highways were canvassed at length in those estimates. My concern was that if we didn't afford ourselves the opportunity to ask about the specifics of these capital projects during these estimates, we might find out subsequently during Health or Education that we had missed our opportunity. That was very much the context of my question last night -- at which point the minister said, "I think it's timely now," at which we went back and did a fair amount of work to make sure we were prepared to address the specifics of these issues today. I guess that just means we're now prepared in advance for the Health and Education estimates.
I would like to come back to my specific question to the minister, and that's with regard to B.C. 21, Build B.C. and the capital planning secretariat in his ministry. I would like to ask the minister what latitude of debate he sees as appropriate for this estimates debate.
[3:30]
Hon. D. Miller: I would say, in a broad way, that it is to inquire as to what the purpose of the capital plan was. We did discuss that. I talked about seeking efficiencies, looking at coordinating the work of some ministries. I mentioned one project, for example, that was a first, and that's the Mission joint project where we have consolidated both a post-secondary institution and a senior secondary institution. To look at those kinds of things, I do believe I mentioned a standardized contract document that was developed; I think BCBC played a fair role in that. Anything in that vein is quite
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legitimate in terms of what the purpose was in having a consolidated capital plan. Now that's moved on to some degree because of the capital review. I hope that helps the member.
C. Hansen: One of the things that I tried to do is get an understanding as to what B.C. 21 is. That has not always been the easiest challenge, because the number of different opinions you have depends on the number of people you ask. Certainly I have yet to find two people in government generally who have the same perception as to what B.C. 21 is and what Build B.C. is. I'm wondering if the minister could explain for the record what he sees as the difference between those two funds, although I gather that B.C. 21 is not so much a fund as a way of packaging a group of projects together. Could the minister elaborate?
Hon. D. Miller: That's true in a sense. B.C. 21 generally was to give some focus to what we were trying to do in terms of our strategy around capital investment. That is why, when you see buildings around the province that are under construction or highways under construction, you'll see the logo B.C. 21. Really, the notion there was building B.C., the concept of investing in our infrastructure as a necessary part of expanding our economy. That was an attempt, through the capital plan, to coordinate the capital expenditure plans of various ministries rather than have those ministries act in a completely independent way. I think the correct view was that through some kind of coordinating effort, we could realize efficiency savings. We could look at how we might combine the capital that was taking place independently in a couple of separate ministries into projects, like the Mission joint project that makes eminent sense and that, by the way, now has been duplicated in the Campbell River project.
So there are clearly very good efficiencies, not only on the capital side but on the operating side, and benefits when you move into the opportunities for the integration of grades 11 and 12 and post-secondary. There are just great opportunities; you get grade 12 students now who have the opportunity to take a college credit course in the same facility where they're finishing their high school.
It was also an attempt to look at making sure that capital spending wasn't concentrated unduly in any single region of the province. That's not been perfect; there's been a fair concentration in the Prince George region, for a couple of reasons: the new university, a correctional facility and other things. But it was an attempt to generally ensure that the benefits of that capital spending were spread throughout the province in a way that seemed fair, rather than having it concentrated in any single area. I guess the Island Highway, you could argue, by its very geographic nature, had to require concentration of capital on Vancouver Island.
So that was the intent of B.C. 21: to coordinate and harness that pool of capital to make sure it achieved the social and economic objectives that made sense for the province.
C. Hansen: Again, this is for my own education, if the minister doesn't mind. The Build B.C. fund is a specific fund that's under the B.C. 21 umbrella. Is that a fair comment?
Hon. D. Miller: Yes. Again, a review of Hansard from last night, I think, would indicate that we did have some discussion along these lines, and these questions were dealt with.
C. Hansen: I'm just trying to get a sense of where these things fit together. I do recognize that we canvassed this last night.
It appears as if the capital planning secretariat is a new secretariat within the ministry. I'm wondering where that was formed from. Is that the transfer of other positions or a consolidation within the minister's ministry?
Hon. D. Miller: There really was not a secretariat at all; there was a program and capital development division within the ministry.
P. Nettleton: I'd like to draw your attention, if I may, to northeastern British Columbia, specifically the Peace River region. The petroleum industry in British Columbia contributes somewhere in the range of $350 million to the provincial coffers each year. As the minister is no doubt aware, there is significant ongoing petroleum resource development in that region. There are many concerns in the Peace country that poor maintenance of infrastructure is driving investment and jobs out of the region -- that is the perception, in any event. I would ask the minister to address this question in a general sense: how does the ministry plan to sustain economic development in this key industry and maintain those important resource revenues for the province, when the infrastructure is underdeveloped and poorly maintained? Has the minister given any thought to addressing those concerns of people in the industry in the Peace River region?
Hon. D. Miller: I appreciate the member's question. I'm not specifically aware of the maintenance issue. In fact, there may be issues there; just because I'm not aware of them doesn't mean they don't exist. I have had an initial opportunity to meet with the Canadian Association of Petroleum Producers, and I think we had a pretty good meeting. We talked about a range of questions; it was obviously an initial meeting. I must say that this is an industry that I've got a lot to learn about, same as the mineral side. We did have a good discussion.
I understand both from them and from statistics in the ministry that the level of activity has been extremely high in the Peace region. Just to give you some indication, in 1995 they recorded the second-highest level of drilling activity in the province's history. The number of wells drilled was 438, compared to 520 wells in the record year of 1994. Gas production was good; it exceeded 1994's production by 10 percent. I also understand we're dealing with the petroleum association on new drilling techniques -- horizontal drilling, etc.
So it appears that from an economic point of view, it's actually one of the hot spots in the province, primarily because of the oil and gas business. If there are further issues around maintenance, I'll certainly try to become informed on them.
P. Nettleton: Specifically, one of the concerns that has certainly been drawn to my attention is the issue of poor maintenance of the roads. Trucking companies, no doubt the minister is aware, form an integral part of not only the petroleum industry but also the forest industry, and apparently the maintenance of the northern grid roads is a major factor contributing to high operational costs in British Columbia. Many of these very same companies operate not only in British Columbia but also in Alberta. In their view, the roads in British Columbia are inferior to the roads in Alberta.
In closing, I would ask the minister, in terms of the commitment of not only this minister but this government to the industry, to the residents of northern British Columbia and in particular to the petroleum industry: what is the commitment in terms of a return of some of these funds to the infrastructure in the Peace River region?
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Hon. D. Miller: I have some more specific information. Again, with respect to the member's question, I'm not quite certain if it's the more broad, general question in terms of the state of roads. Our responsibility, or our partial responsibility, is really only on one road, the Sierra-Yoyo-Desan, and that's a road system of about 200 kilometres in length which extends east and north of Fort Nelson. It serves the petroleum and forest industries and the recreational users, so it's not just the energy users. It appears that there's sort of a multi-jurisdictional responsibility; some with other government ministries, some with the private sector. It's the only all-weather surface access to oil and gas fields in the region.
So there is a proposal. Those agencies have been working with my ministry. I understand there is a proposal, although no decisions have been made about it, that the responsibility be consolidated under the Transportation Financing Authority, with some appropriate contribution by the private sector, to really give one agency the mandate to maintain the road. As for any other broad issues around transportation corridors, whether they be private roads or indeed public roads, I don't really have any further information on them.
P. Nettleton: Perhaps I could get the particulars on the proposal that the hon. minister has referred to.
L. Reid: As I was sitting here, I was musing about the minister's introduction, the other day, of his grandson. I was hoping that that kind of bashfulness is probably a family trait. I'd like nothing better than to see the minister kind of hunker down behind his desk and wave his little paw at us.
Hon. D. Miller: I'm quite shy.
L. Reid: You know, I knew that.
In terms of science and technology, I want to spend a few moments on the national strategy, move to where British Columbia sits and then pose some specific questions to the minister.
One of the pieces of correspondence -- and many, many pieces of correspondence reflect a national strategy that does include lifelong learning and access to
Certainly we want to build on some strengths across the country. That's what the national strategy on the creation of science and technology programs looks at. Where we are, in British Columbia, it is much more specific. One of the significant issues that always comes to the fore is around taxation. If this ministry is interested in fostering science and technology as a plank in an economic platform -- that is certainly the perspective that the Liberals bring to the fore -- we would very much want the ministry to fold into their thinking some understanding of whether they believe that taxation has any kind of impact on strengthening research and development, and strengthening science and technology. We're convinced that it is a powerful player in the field. Certainly there are some areas we can probably address. I think some of these issues are absolutely non-partisan and just make good business sense, and perhaps we can discuss those in more detail.
The minister has heard me speak many times about strengthening post-secondary institutions to maintain a pool of qualified scientists and engineers. That's vitally important in terms of keeping the finest minds in British Columbia. There is no doubt that our institutions graduate the finest minds. We need to do some things in terms of keeping those people here in British Columbia. If we don't, we won't have any ability to attract new and gifted individuals to the process. We certainly have some very fine institutions. I'm not convinced today that we do enough so that they work towards drawing in new individuals and creating new opportunities for research and development.
[3:45]
We could do some things, I think, as a province to promote their expertise around research and development. I believe the minister has heard me say in the past, as has his predecessor, that we are committed to continuing the Science Council of B.C. The ability to leverage some opportunities and to champion some causes around science and technology is a good thing and will continue to be a good thing on behalf of the Science Council. But it is, I think, one of the things that's absolutely non-partisan, so we must fund that institution wisely so that it is in a position to make some good decisions.
One of the issues I'd like to discuss at some point -- and this minister certainly may or may not have a comment, so I'm more than prepared to take it up with the Minister of
I began with the broader national perspective. These are the issues that seem to be provincial, but I wouldn't say that they are unique to British Columbia. I think all the provinces are grappling with some of these issues. I want to spend a few moments, if I can, on the theme for my remarks today, which will be around accountability and measurement in science and technology. There are some good things happening in this ministry. I'm hoping that the minister will comment today on how this ministry is measuring its success in terms of the dollars that are going through the different programs. How, indeed, do you decide? What are the criteria for selection to support some of these endeavours in the province? When does the report come back that says those dollars were well spent or not? Those are issues for us, hon. Chair.
I want to ask the minister to comment specifically on the task force that is in response to the 1995 report, High Technology Industries in British Columbia: The Agenda for Growth, which was sponsored by the Science Council. The task force that responded to the original report has made a number of recommendations. My interest today is to find out what the minister's response is to a number of those issues. I believe there are 19 recommendations contained within this report, and my concern is around approximately five or six of them.
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The first recommendation is to: "Develop a strategy to help companies attract senior U.S. personnel to relocate to the province." They're saying American personnel, in this instance, only because there seems to be a lack of skilled senior management when it comes to operating businesses. We have no lack of scientific knowledge in this province; our scientists are doing some very fine things. But when it comes to commercialization of a product, the business plan is often lacking in terms of operating the business effectively enough to get that product to market. Has this ministry and this government looked at any plans around ensuring that we retain and attract some very fine managers of the science and technology business?
Hon. D. Miller: I should say at the outset that while, indeed, we do have the report, we have not, nor has the Science Council, completed work with respect to specific recommendations. I'm not saying that to try not to give some response in a general way, but I can't give a definitive response with respect to those issues.
First, dealing with the labour issue, I did have a meeting some time ago, in my former capacity as Minister of Labour, with quite a good group of people from that sector, organized by Dr. Axel Meisen from UBC. I thought it was quite a productive meeting.
Certainly it's not our intention to try to inhibit the kind of flexibility that those firms require, but just looking at the issue of recruitment, we got into a somewhat philosophical debate relative to the capital tax. I did say that one of the problems that I thought existed, particularly in the lower mainland, is that you have to look at the total cost, and included in that are housing costs. Indeed, I think that is a problem. It's easy to identify a problem; it's pretty hard to come up with a solution, particularly in that area. So we have to look at a range of issues, but I don't know if you could ever have a single, absolutely comprehensive response or definitive response that solves every problem in terms of recruiting into British Columbia. On the other hand, it is a very desirable place to live. I suppose that for many people, that is an attraction, given that there are lots of areas, particularly in the States these days, that are not very safe to live.
L. Reid: Just to emphasize the point about the necessity for skilled management, I will read from a newspaper article, dated November 6, 1995:
"'B.C.'s high-tech successes will continue to be gobbled up for lack of managers,' warns Farris. The high-tech financier says the province can't provide the depth of management to run a billion-dollar company and fears more companies will be swallowed up."I think that the point I'm attempting to make with this minister is indeed valid. I appreciate the general response, but I'm committed to seeing this minister respond specifically, at least in the next three to six months, because once the entire industry has identified the problem, it is appropriate that the ministry has some response. Certainly if the minister's not aware of this article, I'd be happy to share it with him, because it lays out the issue, the problem, in infinite detail.
Another one of the recommendations says: "Formally identify an influential and committed cabinet minister with a mandate for championing knowledge-based industry in B.C." My question would simply be this: are you the minister?
Hon. D. Miller: I'm just looking. "Formally identify an influential and committed cabinet
L. Reid: Are you that man? That's what I want to know.
Hon. D. Miller: I'm pleased to say that I'm not sure that I completely fit that bill, but indeed I am the person.
L. Reid: I needed that on the record. I have a number of people who ask me: "If I contact this person, will he take this message to the cabinet table? Will he be a strong voice for science and technology?" I can only hope that you continue to fight the good fight.
On recommendation No. 8 -- and again, this is not the original report; This is "The Agenda for Growth: High Technology Industries Task Force," so this is representative of the industry -- they're saying: "Make use of the government procurement process as a tool of economic development in order to assist emerging companies." That one, I hope, will result in the minister giving a more specific response, because I'm interested in knowing the status today and what the future plan is.
Hon. D. Miller: In fact, I don't know if
L. Reid: Proposal No. 8 recognizes that B.C. Systems has ceased to exist, and since the minister raised the issue of IBM, perhaps the minister can simply provide an update on the Pacific Development Centre. It's my understanding that that entity was put in place to build data-handling systems for sale to other governments. I understand it's in the works. If the minister could provide me with a status report, that would be wonderful.
Hon. D. Miller: Mr. Chairman, there is an overlap through the chief information officer, Mr. Surich, under the Ministry of Finance. As of this date, I've not had an opportunity to meet with him, but I will be doing so, I hope in the near future, to look at the kind of work being done around the electronic highway.
L. Reid: Specifically for the minister -- and if he's not able to provide it today, as long as it's
Hon. D. Miller: Discussions are taking place, and I'll attempt to get some sort of status report to the member.
L. Reid: If I might ask -- and if the minister's not able to confirm, I understand: will IBM be in place in this province
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under the title of Pacific Development Centre? It's not so much the status of the negotiations in terms of what they might do, but are they coming? Are they here?
Hon. D. Miller: I met with IBM, and I think the Premier met with IBM. There was an announcement, if I'm not mistaken, in April. There was a recent story, within the last two to three weeks, a very positive story in
L. Reid: Positive but vague.
Hon. D. Miller: I didn't write it, so there's the reason.
Interjection.
Hon. D. Miller: Fill in the blanks.
I really can't give you any more definitive answers. We're still obviously in discussions on it.
L. Reid: I appreciate the minister's offer to provide some detailed information at a future time.
With reference to recommendation No. 15: "Coordinate focus on the development of the human resources of the industry, particularly managerial, marketing and sales
It seems to me that this is one of the critical recommendations of this report. It was certainly reflected in the original report, and frankly, it's been reflected in every report written on science and technology, that somebody has to be the coordinating vehicle. Is that an area where this minister may seek to become more involved?
Hon. D. Miller: As the member is aware, there's been, I think, a significant push on the technological training side. I keep referring back to former ministries of mine when I respond to these questions, but giving six -- seven, now -- of our post-secondary institutions degree-granting authority, developing six new technology-based programs in those
Mr. MacDonald, for example, of MacDonald Dettwiler, who I think is leading-edge around the world, graduated from high school in Prince Rupert like myself -- well, not like myself
There is a range of human resources initiatives -- the women-in-science steering committee -- and science fairs. There are a number of scholarship programs: the IPDF program is intended to create opportunities for recent PhD graduates in science or engineering to work in B.C. companies -- 75 percent of salary to a maximum of $25,000 for two years; STARS offers $17,000 to assist people working in industries to return to university for a graduate science or engineering degree. Collaboration between industry and universities includes graduate recruitment to assist universities to recruit outstanding postgraduate students. There is on-line science career information, student summer employment in science and technology -- which I think has, again, been an unqualified success -- and the First Job in Science and Technology program. There is a range of programs both across government and in partnership with the private sector that really is encouraging the stimulation.
There are those who have talked about this critical mass. That is one of the reasons I was quite pleased to see IBM come to government. We didn't go to them; they came to us and said: "We are strongly interested in locating in British Columbia." Some people do argue that we have got a very good cluster of high-tech companies in this province. I think that with the initiatives that are taking place in the private sector, in academia, the post-secondary institutions and government, we'll continue, through the Science Council and other organizations, to see that grow.
[4:00]
L. Reid: I appreciate the minister's comments. As his past critic in Skills and Training, it's nice to hear that some of those initiatives are moving ahead.
My particular question wasn't just around fostering or stimulating jobs in science; it was around the science-manager-marketer job. If the minister could perhaps have the ministry fold into their thinking some opportunities, where you have the First Job in Science program and you share the salary and the costs of making that employee more effective in the system, perhaps some of those same initiatives could be put in place to train managers -- senior-level managers -- to operate science and technology companies.
Some of those other programs the minister mentioned are extremely well taken. But I'm thinking that if we continue just to foster the idea, without the manager to bring the product to market, those very ideas will be the ones that Mr. Farris referred to: the ones that are found in the United States marketplaces first. Could the minister kindly comment?
Hon. D. Miller: I did touch on the work being done by the post-secondary institutions. Haig Farris, in fact, teaches a course at university on that. There are continuing education courses at all of the institutions so the people in the field can acquire those skills. So yes, I think we are trying to deal with that.
L. Reid: I appreciate the minister's comments. But it seemed to me, from his remarks, that the financial incentives are available to offer first jobs in science -- i.e., the scientist person -- as opposed to any financial incentives to inspire the managerial person. Again, I am asking the minister to fold that into his thinking, because that appears to be where the lack is today.
In terms of recommendation No. 16, it says: "Provide individual, tailored assistance from government, industry association and the universities to the 'Top 100' knowledge-based companies in the province." I'd like to commend the ministry, if indeed they take up this recommendation, because
[ Page 1262 ]
it has always saddened me when we have someone like the Minister of Forests or the Minister of Environment stand up and find the ten worst forest companies, the ten worst polluters.
To me, it is much more positive, it makes much more sense to look to the ten best or, in this case, the 100 best. It can be done. Frankly, it could be done in forests: the ten best forest companies, the ten best environmental protectors, if you will. There are some things that we need to rejig around how we present this information to the public. This would be a very positive move. I would be pleased if the minister were able to proceed with that initiative.
One of the references in here is a time line, and it refers to the task force looking for implementation of specific recommendations by December of '96, roughly five months from now. I need to know if, indeed, there will even be a response to this report in the next number of months, because the industry is in need of some encouragement, in need of some guidance around these questions. I appreciate the minister's remarks that the report has not been responded to. But indeed, if these recommendations are due to be in place in five months -- and that's a reasonable time line for the industrial technology association in the province, for the people who are actually producing the science -- I and they would need to know whether it's likely that the minister sees fit that he'll be able to respond to this time line, if the report has not been received or responded to as of yet. I ask for the minister to comment.
Hon. D. Miller: Again, I don't want to mischaracterize the recommendation or anything else, or be overly critical, but just looking at
We probably need to try to get some clarity around the issue of science and technology, because it seems to be one of those areas that everybody's really in love with. I couldn't find anybody who
But when I look at a recommendation that says to provide individual, tailored, non-financial assistance from government, industry associations and universities to all knowledge-based companies in the province which are not qualified for more direct assistance, I've got to challenge that a little and say just what the heck does that mean? That's a pretty broad statement. While it might describe some desirable goals, I really think there needs to be some clarity around just what they're proposing. So that's a challenge.
This sector is one where, again, the partnership is critical and where nobody is unequal with respect to these recommendations. They're not, if you like, just government's. They are recommendations that really are the property and responsibility of the entire community, including government. So we're prepared to sit down and work with the sectors to see how we can continue to play. We have played, really, a pretty positive role, both on the financial side and in working through post-secondary institutions. Just looking at the total government investments in research and development, as well as in science and technology infrastructure, in every sector of the province, we're probably at about $100 million. I think that's pretty fair.
L. Reid: The financial contribution in terms of being $100 million, give or take, is probably decent. But in terms of the investment return from science and technology, most folks agree that it comes in around 28 percent. That's like earning 28 cents on every dollar. I mean, that is a very decent return.
In terms of this minister asking about defining the true intent of that recommendation, if there were any way for this minister to make government more user-friendly in terms of streamlining some kind of regulatory process, that would have answered a great deal of what that recommendation asks for. Right now, government frustrates more businesses than it satisfies on the first two or three meetings. Yes, I do believe the minister could define that recommendation very clearly in terms of government being more effective and bringing those businesses on line in a much more timely fashion. I'm also committed to the notion that government could encourage the creation of more buoyant financing vehicles for a lot of these companies. Again, I would support the tenor of the recommendation that doesn't ask for finances. But to put in place some opportunities for those companies to secure that level of financing would be a very good thing.
Recommendation No. 18 says: "Continue to improve the regulatory regime for securities as suggested in the Matkin report, and ensure that technology companies are represented in the governance of both the VSE and the B.C. Securities Commission." This is a troubling one, based on the debate the other evening in this very Legislature, where your Minister of Finance, hon. minister, was resisting B.C.'s participation in any kind of national securities regime. If we're going to do some decent things for science and technology across the country, we can't make it more difficult to do business in British Columbia. That would be absolutely contrary to where you say your government and ministry are headed. Can I ask the minister to comment on recommendation 18 and whether or not he will spend any time having this conversation with the Minister of Finance in terms of creating the necessity for government, particularly around science and technology, to be user-friendly?
Hon. D. Miller: I have not had any discussions on the issue of the companies being represented on the Securities Commission or other vehicles. I think we have made a very good commitment to the development of high technology, and work quite closely with that sector in the province in a way that has produced some good benefits. We've seen some growth: over a five- or six-year period, about 25 percent. It's clearly a growth sector. It employs more than 35,000 people, and in '94 the output had exceeded either mining or pulp and paper.
We've got the kinds of science and technology funds I've talked about. The kind of work we're doing through trade and
L. Reid: In that the minister just referenced programs that are in place, perhaps he could give me a breakdown of any dollars left in the First Job in Science and Technology program. We have received correspondence from individuals who have applied and are told that the fund has been exhausted. One individual was told before the election that the government may extend the program and provide more funding, so the question is significant. The minister continues to talk about the program. Are there any dollars left in this program?
[ Page 1263 ]
Hon. D. Miller: The dollars in the program are fully committed.
L. Reid: What was the total value of the program, and what was the date upon which those dollars were fully committed?
Hon. D. Miller: It was $1.8 million. Which date were you after?
L. Reid: The date that those dollars were fully committed.
Hon. D. Miller: By April of '96, requested funding totalled $3.5 million. The $1.8 million budget allowed for approval of 144 positions, but it is obviously very attractive. Employers continue to submit applications. I don't know about dates, but it's fully committed.
L. Reid: I appreciate the minister reiterating that. However, being of average intelligence, I got that the first time: the program is fully committed.
How long has this government advertised this program -- since there are no dollars left? That's the intent of my question. Was it all used up two weeks after the first announcement, or has there been some ability to respond to an ever-increasing need?
Hon. D. Miller: I don't know. It was announced, it was supported, everybody liked it, and it was oversubscribed. I don't know what more you can say about it.
L. Reid: Given that the minister talked repeatedly this afternoon about the necessity of education around science and technology and that it is a package, it all needs to flow together -- some kind of seamlessness to the process, if the minister can wrap his mind around that term. I know it gave him great difficulty the last time he and I were in estimates together.
As the minister states, this program has been exceedingly successful. Is there some opportunity for employers in the province to find out what the future holds for this program? When will it next be announced? Is there any intention to reannounce it? It seems to me that this may be one of the flagships of the ministry, and unless there are dollars available, there's not a great deal of confidence in the system if people are always told: "The dollars are done; thanks very much for applying." What is the next step for this program?
Hon. D. Miller: It was a good program. I think all future programs, though, are something that governments review and make announcements on from time to time. That question, really, is a question of the future, and I can't give a specific answer to it.
L. Reid: I would only ask that the minister craft some kind of reasonable response and provide it to the opposition in the next number of days, because the minister must know that we are receiving vast numbers of inquiries around the program. I'm happy simply to have the inquiries delivered to the minister. That may indeed be the best answer.
Recommendation No. 19, the last one in this report, says: "A comprehensive communications plan should be developed which presents the knowledge-based industry in B.C. in a positive manner." Numerous programs are out there. We started this afternoon's conversation around coordination, because the essence of success for any kind of communications plan is whether it is coordinated across the ministry and across government. There seems to be a huge lack, with the Ministry of Environment not knowing what this ministry -- in this case, Employment and Investment -- may be doing. In fact, there are some very fine science and technology programs within the Ministry of Environment.
Are you selling this as a package? Is somebody coordinating this across government? It seems to me that the recommendation is an excellent one, and even if the ministry does not take up this particular recommendation, I know there will be some government advertising around these programs. My question is simply whether there will be some coordination around that level of advertising.
[4:15]
Hon. D. Miller: Again, going back to an answer I gave earlier, there are a number of suggestions in the task force report. They have written to me; we want to get into some meetings and discussions to try to get some clarity about those, and yes, we obviously would want to coordinate activities.
L. Reid: Does the minister have a time line for any kind of communications plan that will continue to put science and technology in this province in a decent light?
Hon. D. Miller: I must confess that I may be the only member here in Victoria who, in thinking of time lines, is sort of preoccupied with another question. But yes, we do an annual communications plan and we will continue to do that.
L. Reid: The vagueness of that response is not warming my heart, hon. minister. In terms of when companies and prospective employers can hope to see something outlining this ministry's plan for science and technology, are we talking about six months or 12 months?
Hon. D. Miller: I'm happy to report that we do have a plan.
L. Reid: I know that. When?
Hon. D. Miller: We have a plan. It has been published.
L. Reid: The minister made reference earlier to how we will measure success in terms of different-sized companies in the province. The position the Liberals have always taken is that you do need some very large companies that will indeed spawn smaller science and technology companies. The minister referenced MacDonald Dettwiler and Associates Ltd. I'm very familiar with MacDonald Dettwiler; it is in the riding of Richmond East. Certainly a number of discussions with John MacDonald and a number of individuals around the
Interjection.
L. Reid: Good for you! Let's take a moment and acknowledge the minister; he put his hand on the right piece of paper.
In terms of measuring success around the program, many people have talked about a particular number of jobs in the industry and a particular number of companies. One of the references has been around three companies employing over
[ Page 1264 ]
1,000 people, ten companies with over 500 employees and 100 companies with over 100 employees. Again, this is a recommendation. I'm wondering if the ministry has such a benchmark or target that they're aiming for over year 1, year 5 and the next ten years -- or whatever the target or time line might be. Could the minister share it with us this afternoon?
Hon. D. Miller: That's not incorporated in our strategic plan, but again, it's an issue that I want to discuss further, both with my officials and with the people in the private sector.
L. Reid: If that criteria is not part of your plan, could the minister kindly indicate what criteria are in place to measure the success of science and technology in British Columbia?
Hon. D. Miller: I did refer to some of the economic gains, I think, not only from the investment side, but from what we've realized in terms of the growth rate -- 25 percent, I think -- over the past five or six years, and the kind of employment that's been generated. We evaluate all of our programs on an ongoing basis to ensure that they're effective.
L. Reid: That doesn't sound like a committed voice at the cabinet table for science and technology. That sounds like the standard response.
In terms of being more specific, can I again ask the minister to wrap his mind around some specificity when it comes to measuring success? Because you evaluate your programs on an ongoing basis, that gives me no information at all in terms of what you're looking for in measuring success. In your mind, what would be a successful company? What would be a successful example, if you will, of this ministry's look at the system? Do you want to see 100 more companies? Do you want to see ten more companies? Do you want to see this province have 50 new graduates every year? I mean, there must be some specific performance criteria within your evaluation structure. And if there isn't, frankly, there should be.
Hon. D. Miller: I did indicate that we do evaluate our programs. By the way, our evaluation of our R and D program is something that I am informed is being sought elsewhere as a model. So I don't want to suggest that the tenor of my voice somehow suggests lack of commitment. I think we're on track in working with the private sector in this field.
L. Reid: Perhaps I could simply ask the minister to share with me the model for evaluation. I'm completely aware that he does not have that with him at the moment. If he could simply provide that, I would indeed be grateful.
I want to move to the consideration of taxation in British Columbia, because I know it is a factor when it comes to science and technology. It's a significant issue, and certainly British Columbia has one of the highest marginal tax rates in the country. It certainly seems to be an issue. But again, if this minister is going to be our voice at the cabinet table, then he has to bring some influence to bear on the Minister of Finance, if indeed he's serious about bringing a science and technology community of some repute to the west coast.
Now, this minister may or may not be aware, but when the Prime Minister was last in British Columbia, he talked about the future of Canada being in the west, and that this will be a decent home to science and technology if indeed we all make the commitment to making it happen. Taxation is one spoke in the wheel, but it is a significant spoke. If the minister could make a commitment today that he will continue to address this issue at the cabinet table and continue to bring it forward when issues of science and technology come up for discussion, that would at least be a single step on the road to making sure that we are encouraging people to come and not hindering their ability to bring business to this province.
Hon. D. Miller: It's amazing how we repeat ourselves over and over again. I think this is the third or perhaps fourth attempt by the opposition to deal with tax questions. I'm happy to do that, but it tends to drag the issue on. The sector is growing at a pretty good rate, about 25 percent. Mr. Chairman, at the risk of you chastising me for being repetitive, I'll have to re-read some of the information I read yesterday. It won't take too long, and I don't think I could summarize it. But it really puts paid to the kind of narrow and sometimes rather simplistic argument that a single issue is responsible for business being here or not being here. Unfortunately, there has been an overconcentration on the corporate capital tax. That's too bad, because I think there are other issues; I mentioned housing.
Let me just try to proceed. These are the facts as we know them, and some of these are through studies. Overall tax burdens for manufacturing, high technology and small firms in British Columbia are often lower than those in competing North American jurisdictions such as Washington State, Oregon and California. Tax advantages in B.C. compared with the U.S. include lower payroll taxes, the exemption of machinery and equipment from property tax, lower tax rates for small businesses and manufacturers, and more generous research and development credits.
The '96-97 budget, the one we're in now, includes a two-year tax holiday for new small businesses. Total personal taxation in B.C. is the second-lowest in Canada. Compared with the U.S., personal income tax rates are significantly higher for highly paid personnel -- that's people earning over $100,000 per year. However, B.C. high-tech firms which might need to recruit senior executives from the U.S. have some large compensating advantages, such as lower compensation costs for junior- and middle-level personnel, who account for the largest share of the payroll, and significantly more attractive R and D tax incentives. The government has just extended the existing two-year tax freeze for an additional three years -- freezes on tuition fees and ICBC rates, and modest tax cuts for those middle-income earners.
According to a recent KPMG study, B.C. is more competitive overall than U.S. west coast locations in a wide range of value-added manufacturing and high technology industries -- which, again, are the fastest-growing. Internationally, British Columbia ranks as inexpensive for executive, managerial and professional personnel. Vancouver ranked 123rd in a Swiss-based corporate resources group's cost-of-living survey -- not bad. I don't know what the opposition's goal is. Maybe it's Third World status, the way they talk about taxation.
So given all those factors, given the kind of programs we have, I think we can hold our head up as high as anybody with respect to what we're trying to do in British Columbia to promote the development of the technology business. That will continue to happen. I perhaps have risen to the bait, as they say, and perhaps I shouldn't have, but I hope that we don't have to constantly chase our tail on this thing. We appear to be doing a little of that.
L. Reid: I thank the minister for sharing that. If he would be so kind as to provide us with a copy, that would be very fine. In terms of the reference to being 123rd, it's not terribly useful unless we know the base: 123rd out of...? It would be an interesting statistic for the minister to provide.
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Hon. D. Miller: What if it was 125th?
L. Reid: That would be interesting to know, and that would not support the position you were taking.
Hon. D. Miller: It was out of 130.
L. Reid: Thank you very much. In terms of the minister citing examples across North America, of more relevance, hon. minister, is what's happening in Washington State and in the province of Alberta. Marginal tax rates in Washington State are approximately 35 percent; marginal tax rates in the province of Alberta are 44 percent. We're 10 percentage points higher than Alberta. For you to cite the eastern seaboard or the western United States is of very limited relevance. There needs to be some attention paid to our neighbours closer to home. If I can ask the minister to do that over time, that would be most appreciated.
In terms of one of the other spokes in the wheel around what we do to bring investment to this province, certainly public-private partnerships are one of the aspects that I think we can explore in more detail. I'm delighted when I hear that things are happening that make good sense to British Columbians, particularly around health care. That seems to be one of the largest sectors -- biotechnology -- in the knowledge-based industries.
There are some things that I think this minister, this government, can do around finding some solutions to some very complex problems, particularly around Alzheimer's and breast cancer. There are some issues of research that have been neglected in both of those areas. It seems to me that if this government were truly committed, they would put some dollars aside to fund some research chairs at our universities, so that we would actually be addressing the costs of those diseases -- which are enormous -- with some kind of strategic plan. That seems to me something we might want to do.
One of the companies that has been in touch with me, Glaxo Wellcome, talks about their presence at the University of British Columbia and about investing $1 million in clinical-trial research in the province in 1995. They've also partnered with the Universities of British Columbia and Victoria on a tuberculosis research agreement worth $1.2 million. Certainly this kind of public-private partnership is a good one, and it saddens me that this ministry, this government, takes every opportunity to take a hit at the pharmaceutical companies and never, ever mentions the fact that they're doing some very good work in this province. It seems to me that we should say thank you. We should honour the work that's been done. The clinical research, the clinical trials and tuberculosis research are things that benefit society as a whole, as would research into Alzheimer's and breast cancer.
It seems to me that if the minister is serious about a public-private partnership, perhaps we can create some energy, some passion, some interest around those areas and bring into play whatever partners may be necessary -- i.e., the B.C. Biotechnology Alliance, the biotechnologies industries association. Some commitment from this government that they would see some value to fostering that kind of research at our three major
Hon. D. Miller: I make no apologies for trying to offer some protection for British Columbians against high drug prices. I thought the Liberals supported reference-based pricing. If you're not prepared to look at
L. Reid: This is not about reference-based pricing.
Hon. D. Miller: Mr. Chairman, the member talked as though we routinely go out there and slag pharmaceutical companies. The fact is that they've waged a campaign against this government's right to institute a system of drug pricing that reduced our costs and made them affordable for individuals. If anybody wants to suggest that they don't like that and that they want to campaign against it, then be my guest.
Looking at biotechnology, I was just going to say that in terms of competitive advantage, and going back to that list I read about taxation and other
Technology B.C., last year: $835,000. The Science Council of B.C. funds biotechnology projects through Technology B.C. competitions as one of the 12 peer review committees that is dedicated to biotechnology. To date, awards total over $800,000.
Networks of centres of excellence -- I spoke at length about the UBC centre. Significant capital dollars were put in, in terms of the new centre, operating dollars, and partnership with the private sector and the federal government. These centres of excellence received almost $600,000 from the science and technology fund for biotechnology-related networks at UBC, UVic and Simon Fraser. Networks included bacterial diseases, genetic diseases and protein engineering.
The Biopharmaceutical Innovative Resource Centre received $1 million last year.
The infrastructure fund, providing $6 million -- $3 million provincial and $3 million federal -- over two years, is managed by a for-profit corporation, to support the biotechnology industry through the establishment of joint ventures or strategic alliances with private sector partners, to form small, independent companies providing contract research services. Funding is being provided from the economic and regional development agreement.
Industrial post-doctoral fellowships: $75,000. These are intended to create opportunities for recent PhD graduates in science or engineering to work in B.C. companies.
The Graduate Research in Engineering and Technology scholarship program promotes collaboration between industry and universities.
[4:30]
Market assessment of research and technology: $56,000. This is a grant program intended to help B.C. companies, and researchers from research and technical institutes, colleges and universities, to determine the market potential of their discoveries.
It's pretty comprehensive. So I think that when the member stands up and uses words like, "It's sad," or
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should be a more positive kind of response to the kind of initiatives being conducted by the government and the private sector.
L. Reid: The question specifically to the minister was around whether or not he would look to funding, or to putting in place an opportunity to look at, basic research around Alzheimer's and breast cancer. The list he read is impressive, no question. It was not the answer to the question.
Hon. D. Miller: It's being dealt with through the B.C. Health Research Foundation.
L. Reid: Are you in a position, hon. minister, to respond to those two items? Or does the responsibility for whether or not that happens rest with the B.C. Health Research Foundation, and is that more appropriately asked under the estimates for the Ministry of Health?
Hon. D. Miller: The Ministry of Health.
L. Reid: In terms of other companies that are not within the public-private partnership domain at the moment, certainly Stressgen Biotechnologies here on Vancouver Island is doing some very, very fine things in terms of expanding their knowledge base, their research base, worldwide. A number of my references have been to Vancouver-based companies. It seems to me that the Vancouver Island Advanced Technology Centre and its society is doing some very good things as well. I would like to see the minister look to those kinds of agencies, and particularly this company, when they go to their list of 100 very fine companies, because there are some wondrous research opportunities happening right here on Vancouver Island.
If I might just reference a particular issue that's come up again recently in the
Hon. D. Miller: We have been discussing that with the private sector. We're waiting, really, to see the results of the work the private sector is doing.
L. Reid: If I might provide a little more information for the record, because there are some specific questions that perhaps the minister can answer -- if not today, at a future
Missing from the list is this ministry. I'm hoping that the minister has some kind of coordinating role or capacity to ensure that at least the 236 jobs and, equally important, the level of research are maintained here on the west coast, because this minister and government have responded vigorously on behalf of the fishery and given the impression that it is a number one priority. If this is indeed one of the other spokes in the wheel, to ensure that we understand more about the industry and how best to deliver the industry to the public, perhaps the minister could comment.
Hon. D. Miller: I'm advised that in the last meeting, the minutes specifically referenced the support that the province is giving to this endeavour. Really, the industry is leading the initiative, with support from federal Fisheries. The member mentioned the Fisheries Council of B.C. The private sector, the biotechnology association and the Ministry of Employment and Investment are doing a feasibility study on the restructuring. So we're very much engaged. In fact, the Science Council really is only playing a supporting role.
L. Reid: I appreciate the minister's clarification. It's certainly my understanding that they're looking to have some kind of business plan in place over the next eight weeks. Is that also the minister's understanding?
Hon. D. Miller: It could be eight weeks to three months.
L. Reid: If the minister agrees, it would allow us to create some kind of centre of excellence around technologies and, certainly, around marine biosciences. That's something that's been missing under the umbrella of knowledge-based industry here in British Columbia. We haven't emphasized the necessity for that kind of application, but with our being a west coast community, that would make very good sense.
It's my understanding that sometime in August there will be a federal memorandum of understanding signed that will engage all the provinces in some kind of national science strategy. I believe the date is near the end of the month, sometime around August 26. Could the minister update members of this committee as to the status of those negotiations and what we can expect from any kind of memorandum of understanding?
Hon. D. Miller: Based on the question, I'm really not able to respond.
L. Reid: Is this minister meeting with the federal minister of science and technology or any member of the federal science and technology committee here in British Columbia at the end of August? Let's start there.
Hon. D. Miller: I haven't been able to talk to people in my office about my schedule for a little while, so I could refer you to someone else to ask the question. I'm the last guy you want to ask about my schedule.
L. Reid: My interest harks back to my original comments this afternoon, in which we talked about coordination and some kind of collaboration around science. This is probably not a non-partisan issue, no matter what province you find yourself in. If we believe in the basic principles -- the significant spokes in the wheel -- we're going to advance that information. Let's start with desire. Does this minister have any desire to meet with any member of the federal government around creating an enhanced vision for science and technology provincially and nationally?
The Chair: I think we should proceed with questions that are relevant to the minister's estimates.
Hon. D. Miller: To speak of my desires in such a location would
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L. Reid: With all respect to the hon. Chair, this is absolutely relevant. Most memorandums of understanding have a cost factor attached, so I am sure that in the next day or so the minister will come to grips with this information. If he would be so kind as to provide it, that would be most useful.
One of the items shared with me was a reference to a science adviser allotment, and it appears to be $154,000-plus. Could the minister break that down for me?
Hon. D. Miller: The money is the allocation for Ms. George in her role as an ADM, reporting to the Premier on science and technology.
L. Reid: Could the minister break that down? Is that an office allotment? Is that a salary allotment?
Hon. D. Miller: It's support salaries, secretarial, support for the council. I'm sure we can get that. We could take some time here, if you want to call a halt and see if we can get the breakdown. Do you want to wait, or do you want us to send it to you?
L. Reid: I'd be happy to wait.
The Chair: There seems to be an agreement for a short recess. We'll take five minutes.
The committee recessed from 4:42 p.m. to 4:46 p.m.
[W. Hartley in the chair.]
Hon. D. Miller: Mr. Chairman, I think the request, in view of the detail, is unreasonable. We're not prepared to try to break that down in absolute detail here. I think I've given a general response to the question, and I think it's adequate.
L. Reid: Perhaps if the minister had consulted with his staff, they probably would have arrived at an answer. Again, your collegiality leaves something to be desired.
The Chair: Member, through the Chair, please.
L. Reid: Certainly.
In terms of the Industrial Development Incentive Act, if I can draw the minister's attention to that particular piece of legislation, certainly, as described to me, it is a vehicle to enter into agreements with the private sector. I'm interested in whether there is any kind of cost-benefit analysis on each of those projects, how that information is disseminated and whether that information is available to myself, as the critic.
Hon. D. Miller: Due diligence is done -- and no, those issues are confidential because they involve the private sector.
L. Reid: I appreciate the minister's guidance. My understanding is that they also involve the taxpayer's dollar, and it seems to me that we should have access to that information, at least the portion of the government-funded enterprise. It seems to me that the minister could advise me as to where I might find that information on the various projects that have been funded under the Industrial Development Incentive Act.
Hon. D. Miller: That information is public in terms of the expenditures of government, but any information relative to the activities of the private sector is confidential.
L. Reid: This is a critical point when it comes to determining the success of the various endeavours the ministry engages in. There's a certain assurance, if you will, and a certain anonymity, more
Hon. D. Miller: There are reporting requirements in terms of the expenditure of public funds, and those are complied with. Any activities we engage in with the private sector which require confidentiality obviously have to be respected.
L. Reid: Might the minister direct me as to where I might find the information that is public?
Hon. D. Miller: Public Accounts.
L. Reid: One of the other issues I wish to bring to the table today is the Canada-B.C. Infrastructure Works program. It seems to me that the players have each agreed to put $225 million on the table and that the federal government is in the process. Again, at the June conference, the Prime Minister introduced the concept of a new infrastructure program, and discussions are in the preliminary stages. The federal government has not given the provinces an indication of potential funding levels and time frame for the new program. My question, specifically, to the minister is whether British Columbia's $225 million is still on the table.
Hon. D. Miller: We canvassed this issue already, if I'm not mistaken, Mr. Chairman, rather thoroughly last night.
L. Reid: With the minister's indulgence, we're looking for a single-syllable reply -- either yes or no -- if the minister would be so kind.
Hon. D. Miller: There's nothing on the table that I'm aware of from the federal government.
L. Reid: That was not the question. The question was whether the $225 million commitment to British
Hon. D. Miller: There's nothing on the table from the federal government, and I'm not going to theoretically negotiate a hypothetical situation.
L. Reid: Again, the question specifically relates to a promise made by the previous Premier of this province, Michael Harcourt, when he said the $225 million was there. Is
[ Page 1268 ]
this minister saying today that those dollars are no longer available for any federal-provincial infrastructure program, if one were to be announced?
Hon. D. Miller: I am saying nothing of the kind, Mr. Chairman.
The Chair: Perhaps the member could pursue another line of questioning.
L. Reid: I appreciate the advice from the Chair.
It seems to me that communities and municipalities in this province would benefit from improvements around sewer, water and drainage, which is the original intent of the infrastructure program. It seems to me that a commitment made by a New Democrat Premier, even though he is not the Premier of the day, would carry some weight. I simply need to know today whether or not this minister, and the Premier, will honour a previous gesture, if you will, or an overture that was made because of a commitment made to the federal-provincial infrastructure program. Does that commitment still exist?
Hon. D. Miller: Mr. Chairman, I don't know how this technically falls under my estimates. There was a speech made at the UBCM meeting a number of years ago. I think it was a challenge issued by the province. We have nothing on the table. There is nothing except talk, and you can't negotiate around talk. If there is something on the table, British Columbia will be there.
D. Jarvis: I guess we are on another topic. Isn't that interesting?
It appears that our present status in the mining industry is something like our finances in the province: we've fallen on tough times. The industry is sort of dying unless we do something a little more aggressive to keep it going and make things happen. The province's debt picture is not good, and Price Waterhouse says that the future of mining is in jeopardy. Over the past few years, it has been in a loss position: profits down, employment down, mine closures and very few mines left to replenish the sustainability that is required. For every mine that is opened, approximately two close.
The Premier promised the Mining Association, prior to the election or during the election, that he would implement some type of mining strategy for British Columbia, to revitalize industry exploration. Yet in one of his platform highlights, he said that he was very proud of his achievement in land use planning that ensures the legacy of parks and protected areas, while guaranteeing the mineral industry access to all lands not designated as part of their goal -- that being 12 percent for parkland. We presently have only 9 percent; there is 3 percent to go. That is perhaps a little frightening to a lot of people in that industry. That's the basic problem: the uncertainty. Uncertainties are probably the single biggest risk to the future of investment in mining in this province.
The minister can say that we are giving out moneys for exploration to all those people that have free-miner's certificates and are given $6,000 here, $5,000 there, and all the rest of it. But it's not going to do any good if the mineral they find today is in a park tomorrow or has been restricted because of aboriginal land claims.
There are major impacts on the mining industry as a result of this. Everyone knows that if the free miner goes out there, makes a find and sells it to a larger company, and then the majors come in and take it and develop it, and we have a producing mine in British Columbia. It can take anywhere from five to ten to 15 years. Things just don't happen overnight. So you can imagine how, if a proposal is put to a major, and it says, "Look, we've got a mineral find here; it hasn't been designated," whether it's a park or aboriginal land, and all the rest of
Even the steelworkers' union -- they are probably the biggest union in the mining industry -- is now starting to worry about where the jobs are. They are concerned. They're making approaches. They probably have approached you already, saying: "What are you going to do for our fellow workers and our fellow union people?" So it's not just the so-called owners of the big mines or the little free miner. It's the union people out there, the workers, the lunch-bucket boys, who are getting worried about what's happening to their jobs and the future in British Columbia.
I guess, Mr. Chair, my first question -- it could be my last question -- to the minister would be: is there anything significant...? Is there any true sort of renewal plan that the minister has in mind and that he has discussed with the Premier? Have they agreed to dig us out of our indebtedness in the mining industry?
Hon. D. Miller: I welcome the opportunity to deal with what I think is a very important sector. I should say that in my discussions so far with people in the mining sector, I think we've established a good relationship. They know that I'm interested in the kinds of jobs they create, and they know that I am interested in working with them to see if we can't get some more mining development taking place in this province.
In that regard, I really want to pay some tribute to my predecessor, Ms. Edwards, the former minister, who I think successfully steered through a package of tax reductions that have benefited the mining sector. There's a fair value attached to that, and I don't know that Ms. Edwards ever received the kind of kudos she should have for really spearheading that. I assume the Liberals supported that when we brought those changes in.
I should also say that I'm out there. Sometimes I feel I'm on my own when I'm attacked viciously by the right -- by the neo-cons, as they call them. They have protested in an outrageous fashion the fact that we're involved in a commercial loan with the private sector in the Huckleberry project, for example, so that they can develop the infrastructures and we can get that mine going and develop the 200 jobs that that mine will produce for that region. It's very important for northern British Columbia. I know they're happy with it.
[5:00]
I'm not quite certain whether the members opposite are for or against what we're doing there. I seem to recall a platform plank that, if I'm not mistaken, suggested that every support for business should be withdrawn, that we should take it away and pull the rug out from under them. Of course, that would mean that that project would not proceed. Perhaps the member, when he gets to his feet for his next question, might indicate whether he supports what we're doing in that Huckleberry project or opposes it. I think that position is important for British Columbians to know. I can only say that I'm sure the member will, in a very straightforward manner, state his position and his party's position relative to that investment. To do otherwise would leave the implicit suggestion that they don't support it.
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I'm happy to report in these estimates that the exploration activity is up over 1996. Exploration expenditures are forecast to be at about $124 million; that's not bad. That's an increase from about $84 million in 1995. I don't think you could construe that as a lack of confidence. In fact, some might argue that it's the reverse. It's not as much as historical levels, but it's nice to see that kind of fairly dramatic jump. Claim units recorded are forecast to be up from 31,000 units last year to 35,000. Higher expenditures involve predevelopment work. Exploration spending at operating sites has virtually doubled. British Columbia, at $123 million in exploration activity, ranks fourth in Canada -- a predicted 13 percent share. During the last decade, British Columbia was third in exploration expenditures in Canada, behind Quebec and Ontario. Really, we're doing fairly well.
As I say, the two mines I've been working on the most, the Huckleberry and the Kemess projects, are both in process. They've received clearance through our environmental assessment process. Really, with respect to Huckleberry, it was Canada that was kind of dragging their feet a little. It took a little longer for the Canadian process to give approval to that project. There's a list of some 25 projects, I think, that have passed through environmental assessment and been given approval to proceed in British Columbia.
This is my initial exposure to this important sector, and I appreciate the member's comments. I think there are some land use issues that have been problematic. I think that the end result, both of the processes that have been taking place in the northeast and of the land claims process, is to provide more certainty. I was certainly struck by that comparison. I noted it with respect to a letter that Alaska has been mailing around, saying: "Come to Alaska." Of course, one of the things they can talk about is certainty, because they've settled their land claims. It's certainly important that we continue to do that here, as well. I think the LRMP process in the northeast is moving along.
I've met with people from the energy sector, the mining
D. Jarvis: The one question I've got with regard to that land use is the fact that you treat
Hon. D. Miller: You're not answering the question.
D. Jarvis: We'll come to it. You put three or four to me, so I'm going to answer them for you, seeing that we're in a reversal of positions.
You treat mining like it was in the forest industry. You know, minerals aren't necessarily always on the river bottoms or mountaintops; they're all over the place. What you've cut off and left for the mining industry to explore is limited, and there may not be minerals in those areas. You're constricting them, and that's unfortunate.
The next statement you
Another thing is that we certainly believe in free enterprise, but
There's a question I'd like to ask the minister. I see that you finished your geophysical test, I guess it was in the Kootenays, with regard to the Sullivan mine. I don't know this, but maybe your staff could give me the correct answer: I understand that a geochemical approach to it is better. I was wondering if they have considered doing a geochemical search in that area for another Sullivan-type mine.
Hon. D. Miller: I believe in free enterprise, too. I think the devil is in the definition. Certainly, having been requested to change the government's position with respect to Apex, I sometimes get confused. "Conflicting signals," I think they call it; one minute people are saying, "Don't do it," and the next minute they're demanding that you do. It's a challenge being the minister, I can tell you, Mr. Chairman.
I understand from my officials that the survey done was a geochemical survey.
Interjections.
Hon. D. Miller: Oh, now I've got geophysical. All right, geophysical -- I think we've established that. The question is: should a geochemical be done?
D. Jarvis: Yes.
Hon. D. Miller: It's a bit early to make that determination. I gather it is dependent on the results of the analysis of the geophysical survey.
D. Jarvis: If you're going to give me that list, I don't need to ask you these questions on Kemess and all the rest of it.
Prosperity Gold, which is the old Fish Lake: has that been approved yet or is it still being hung up by the feds?
Hon. D. Miller: I've had some initial discussions, not an intensive briefing on the project. I gather there are some reservations that DFO has with respect to the project. As I understand it, essentially it involves draining Fish Lake. I've received -- really, it's more
D. Jarvis: Well, that's good to hear, because if they move the little fishies into another little lake -- and I understand from the project that it's going to be an even better and more aesthetic place for the local people to go fishing for the little fishies -- then we can get on with the mine.
I wanted to ask what his opinion was with regard to mineral tenures. Somewhere here I have a letter saying there are close to a thousand mineral tenures caught up in the new parks all around British Columbia. Was it something like 80 new parks that you created? The government tried to say 106, but I think it was only 80 that they actually included; the rest were just additions. In any event, can you give me your opinion as to what is going on in that?
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Hon. D. Miller: I know that the member, as the critic, spoke for his colleagues in our very brief discussion about the potential for the draining of the lake, and I'm heartened that we can probably work together on that issue. I suppose there are some other issues that I don't want to be sandbagged on. For example, I've heard some contrary noises around things like draining a reservoir: does Downton ring a bell? It appears that the mining critic, at least, is open to the suggestion that we drain a natural lake. Some others may be somewhat troubled by the fact that an unnatural lake, a reservoir, is occasionally drained to maintain a dam. I guess that's one of the things that needs to be sorted out -- hopefully, in a rational way. I'm having a bit of fun here.
In terms of tenures, it looks to
D. Jarvis: I was wondering if the minister and his staff could give me some information in regard to the expropriation of mineral claims and compensation since 1990. I've made the request before, and I've never had any reply. Could the minister tell me which claims were compensated, the dates the claims were staked, the size of the property, the total expenditures claimed and the breakdown of the compensation? I'd also like to know just what they did on the property -- whether there was any surface work or diamond drilling. I wouldn't expect that information right this moment, but if ministry staff could put it in writing and send it to me, that would be more than appreciated. Other than that, I have no questions to ask the minister.
Hon. D. Miller: We've certainly noted your request, and we'll see if we can give you all the information you're looking for.
C. Hansen: I myself took a look at some of the issues surrounding the Huckleberry mine, in the context of the use of the industrial development fund. I'd be pleased if the minister would correct me if I'm wrong, but if I understand the history of it, in the case of the Huckleberry mine they did not come to government looking for financial assistance. They came to government looking for a commitment to ensure that the appropriate approval process was dealt with in a more timely manner. The Japanese partners in that particular mine were of the opinion that the B.C. government was lacking sincerity in its commitment to see that mine go ahead. The various environmental review processes that the mine was subject to -- and we certainly support them going through that
[5:15]
Hon. D. Miller: I wish I had brought with me the comments on that particular question made by Mr. O'Rourke of Princeton Mining, which were published in the news media. I was quite pleased to read what Mr. O'Rourke had said, and I'm quite prepared to have that stand.
I believe that we entered into a good arrangement. At one time, I think I did say to some people in the media that I thought that was important -- particularly when you're dealing with offshore interests that are used to doing business with government, because they like to see that level of confidence. That's not unusual. I think you see that in the private sector, in fact. In my dealings with private sector industrial people, I know that quite often when they're looking at trying to attract offshore investors to a project, those offshore investors want existing, established British Columbia companies to be part of it for reasons of confidence. The same holds true in terms of government participation. Then again, I'm aware that on a philosophical basis, the members opposite don't think we should be doing these things. But we think we should do them when it makes sense. In that case, we thought it made sense.
C. Hansen: I believe that particular project was wrapped up in an approval process for two years. The point that I'm making is that throughout that two-year process there was no request made of the provincial government for loan guarantees or any other taxpayer subsidy for that project. What they wanted were decisions. They either wanted a decision for the project to go ahead, or they wanted a decision which said: "Fine, go invest your money in some other country." They were prepared to invest their money in this country, but what they were totally frustrated with during that two-year time frame was the lack of progress when it came to the necessary approvals. Unfortunately, it was
Hon. D. Miller: As I indicated, from our point of view the process was relatively quick. In fact, if I'm not mistaken, the Canadian Ambassador to Japan was writing letters to the federal government complaining about the Canadian process. If I'm not mistaken, the federal minister, Ms. McLellan, was writing letters, or standing up complaining publicly, about the federal process causing undue delay.
You also have to understand, I suppose, that in the public realm, issues of environmental concern are debated rather hotly at times. The important thing is to try to get as rational a debate as possible. That's why, when seemingly or apparently contradictory issues arise, people tend to get confused. For example, one of your critics was going on about not wanting Burrard Thermal started up, based on environmental concerns. I don't know if that's a view shared by the Liberal caucus. I suspect there's probably some difference of opinion; the member seems to acknowledge that. But when it comes to getting on an issue for whatever gain people think might exist, boy, they're hot to trot. One day they'll condemn; the next they'll praise. Everybody wants to have it both ways.
You have to have an environmental system that has integrity. That's number one. We have integrity in our system. Our system worked; it worked fairly quickly in this process. They received their permits from British Columbia. They had to wait for Canada; the Canadian Ambassador had to write letters to the federal government. The member may want to be critical about it, but as far as I'm concerned, it worked in a
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fairly timely manner. As far as I'm concerned, the fundamental issue is that we participated with the private sector and that we've got a mine under development that's going to provide jobs in northern British Columbia. That's important.
C. Hansen: I guess we've got no complaint with the fact that the mine is going ahead; we applaud that.
Just to comment about Burrard Thermal, that is a position that is shared by all 33 members of the Liberal caucus, so as not to start any rumours.
Coming back, I'd like to ask the minister: at what point did the government start to consider making a loan under the industrial development fund with regard to the Huckleberry mine?
Hon. D. Miller: The question is very general. I wasn't the minister at the time, but I do know that we have made that decision and that it's a fact.
C. Hansen: I know that this project was underway for a long period of time. Certainly the proponents of it would not have brought it forward unless they felt it was based on sound economics. I also understand that the $15 million loan guarantee was not part of their original calculation. I wonder: at what stage did the provincial government feel that...? Let me ask a different question. Was the $15 million loan guarantee under the industrial development fund offered by the provincial government, or was it a request from the companies?
Hon. D. Miller: It was requested by the company. I understand that the discussions around that potential for an infrastructure loan started fairly early in the game.
C. Hansen: By early in the game, do you mean two years ago, three years ago? The proposal for that project has been around for some time.
Hon. D. Miller: I think the member is wrong. When I say early in the game, I can't precisely pinpoint the month, but within the last year and a half.
C. Hansen: This will be my last comment. If we look at the approval process for these projects so that we do have projects that are environmentally sound, and if those decisions are made quickly, there doesn't come the necessity for government subsidies or loan guarantees, provided that the companies can go in on an economic basis from day one knowing that there's no government support down the road for them.
I have a concern for environmental review processes generally. I'm a very strong proponent of there having to be environmentally sound economic development, but there are those in our society who use these processes not to arrive at a decision that's about environmentally sound economic development but rather as a vehicle to stifle development completely. I think those individuals who would like to see no economic development and no mining in this province often use the environmental process as a way of tying up projects to the point that they do become uneconomic, and investors leave the province.
I don't know if the minister wants to comment on that, but I'll go on to other things.
Hon. D. Miller: Just to sum up, the company did publicly praise the government for its environmental process and the timeliness of that process. I assume they did that because they felt that way. I've talked to Mr. O'Rourke a few times, and I don't think he's the kind of guy who would stand up and say that if he didn't mean it, so I can accept that as not a bad affirmation that the process we've got is workable.
I tend to agree with the member that there are those, obviously, who want to use any protest to frustrate things from happening. The trick is to design a process, and I think we have, that doesn't allow people to frustrate it. As we said at the CORE table, for example, the only result of your not being there is that your voice won't be heard; it will not be able to frustrate the process.
People do make decisions, both individuals and organizations, and indeed political parties make them from time to time. While political parties talk about process being important, occasionally decisions will be made that I think are just political in nature. Surely the member recognizes that. After all, I think the decision of the Liberal Party to announce that if they were the government Kemano 2 wouldn't complete was made on a radio hotline show without the benefit of any kind of technical analysis or anything. I think it was a political decision, and fair enough. I'm not saying you didn't have the right to make that political decision, but you should always bear in mind consistency. Though some might argue it's the hobgoblin of small minds, I've always found it to be something that is fairly worthwhile over time.
W. Hurd: I've been following some of the debates about the mining industry with a great deal of interest. I want to ask some specific questions, if I might, starting with the conversion from the mine development assessment process we had before to the environmental assessment process. Can the minister tell us whether the ministry intends to do any analytical studies about the cost to the industry of converting from the old mine development assessment process to the new environmental assessment process? Does he expect the soft costs the industry will face to go up, or to be the same, or to go down -- although I have no illusions that that will happen? I wonder if the ministry intends to devote any resources this year to assessing the switchover and what impact it might have on the competitiveness of the mining sector.
Hon. D. Miller: The environmental assessment office, I'm advised, is doing that work, and we're participating.
W. Hurd: Could the minister just describe for the committee the nature of the contribution that his ministry will be making to that process? Are they in just a consultative role? Is it a request for hard statistics? I wonder if he could just briefly amplify on that, because I think it's an important study. Clearly, if the government is making an effort to quantify the increase in costs, that's an important piece of information for these estimates. Perhaps the minister could just advise us what his ministry's role is in that assessment and when we might expect some results to be released to the public and the international community, who may be basing investment decisions on the costs of meeting environmental assessment regulations in British Columbia.
Hon. D. Miller: There was a process, and we've got a new process. We are looking at that, particularly for those who've been caught -- who have participated to some degree in the old one while the new one came in. We do have a cross-ministry group, my ministry included, that is looking at the EA process on an ongoing basis. Obviously we're going to make sure it's workable.
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I think a challenge in any process such as that is implementation: making sure it's working the way it should. So that's something we're going to be doing in terms of evaluating that. I do think it's been given the opportunity to be deployed in several projects now. The one we just talked about is clearly able to come to a decision and give approval for the Huckleberry project faster than Canada's process. I'm not trying to beat up Canada when I say that, but rather to cite that I think we've got a process that's workable and that produces results in a timely way.
W. Hurd: Perhaps I can ask the minister when the review might be complete, and if and when it will be released to the public. I think it's an important issue, and certainly I'd be interested in some closure on a firm set of comparisons between the previous process and the current one. I recognize the fact that there are some companies that might be in an overlap in terms of the old process and the new one. I'm sure the minister's aware of the concern in the mining industry that they will face significantly increased costs as a result of the new process, which will inevitably impact on their competitive position, particularly given the amount of work that goes into exploration before any mining is actually carried out. I wonder, just repeating the question, if the minister could advise us when the review might be complete and whether it will be a matter of public record at that time.
[5:30]
Hon. D. Miller: I'm sure it will be, in terms of working with the various associations. I don't know if there's going to be that kind of report or anything. Really, the member should be aware that, in terms of an absolute fundamental difference, the old mine development process was not a bad process. It had worked for many years. I had some involvement many, many years ago on a project that people were proposing in my constituency, and I thought it was a reasonable process. We brought it together under the EA process. In terms of an absolute fundamental difference, I don't think there is that much. You don't want to look for something too revealing here. It's just an analysis, and it's something that we routinely do.
Someone -- I don't know who -- has passed me this article from the Province of June 28 this year. I just want to confirm what I've been saying with respect to Princeton Mining. Certainly Jim O'Rourke, the chairman, thanked the government. To quote from the article:
"O'Rourke thanked the government for standing by the company despite criticism it took for a $15 million infrastructure loan for a powerline and access road. The NDP was so active in its support that former Investment minister and now Premier, Glen Clark, met its Japanese backers, he said."I think that's nice to read. It shows that we can work with the private sector and develop these projects and provide new job opportunities in northern British Columbia. I see my colleague from Skeena is nodding in the affirmative. I think that's the kind of tone we like to establish. I've certainly advised the energy sector and the mining sector that that's the kind of business I like to do, and I think we're going to have a very fruitful, productive relationship and, hopefully, will produce more jobs in this economy in the many, many years to come.
W. Hurd: That certainly sounds like the speech the minister gave when Apex approached the government for its first loan. I hope that the loan doesn't go the same route.
I want to ask the minister, as well, what role his ministry plays in helping prepare the British Columbia economic outlook that appears each year in the budget document. As the minister knows, there's a series of projections on labour force development, job creation and foreign investment in the province. I wonder if the minister -- since he does, I note, under policy have responsibility for analysis and preparation of provincial employment and economic development policies -- has any role to play in providing the statistics, in working with Treasury Board and the Ministry of Finance in making these kinds of projections. As I'm sure the minister is aware, there are some rather interesting projections in the current economic outlook in terms of employment and investment in the province. I wonder if he could just take a minute to clarify what the role of this ministry might be in that.
Hon. D. Miller: I don't do it myself personally, but I'm advised that we do, along with other ministries, contribute statistical information to the Ministry of Finance.
W. Hurd: One of the virtues of debating spending estimates so far into the fiscal year is that we've actually now gone through almost a quarter and one full month, this being the last day of the month. Since the ministry does prepare these statistics on an ongoing basis for the Ministry of Finance, I wonder if I could direct the minister's attention to the projections for employment and investment and ask him whether he's received information as of the 1st of July, or perhaps even tomorrow, the 1st of August, about whether we're on track or not.
The budget has projected, in terms of employment, an increase of 2.3 percent in 1996. I'm just looking at the projections, and I have more trouble than the minister does doing my math. I think the projection is a significant increase, to up to $2.024 million in 1997. I wonder if the minister could tell us, in terms of the first four months of the current fiscal year, whether he's satisfied that the province and the government are on track in terms of those forecasts that are contained in the B.C. "Economic Review and Outlook" report.
Hon. D. Miller: I'm busy enough that I don't have any spare time, actually, to even pretend that I'd like to be the Minister of Finance.
W. Hurd: I suppose I can confirm from the minister's answer that he doesn't know whether or not the province is on track in terms of employment, real gross domestic product, net population, labour force changes and employment. The unemployment rate, also contained in the "Economic Review and Outlook," had some very generous forecasts: a reduction to 8.8 percent for 1997. I'm surprised that those glowing statistics aren't at least being cross-referenced by the minister, whose responsibility, we're led to believe, is employment and investment. I wonder if in general terms we could invite the minister to comment, based on his knowledge of and presence in Treasury Board, on whether he's confident that in general terms we're on target in terms of the forecasts that have come out in the 1996-97 budget.
Hon. D. Miller: I certainly have a lot of confidence in this government's ability to manage the economy well. I note that some of the most recent forecasts show, again, reasonably buoyant growth in the job creation record, obviously. New jobs being created in the province have been outstanding. Some of the more recent short-term statistics seem to support that.
I must say that my fairly extensive dealings with people in the business community have caused me always to be cautious. I know that the forecasts of many in the private
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sector relative to things like pulp prices have proven to be dramatically wrong. A little quote: "The forecasters
Looking at the unemployment rates, I'm not happy with them. But if you look at the
W. Hurd: I can't believe that the minister extracts his statistics from the Scotiabank newsletter. I guess what I am asking for is the process. Surely there is some routine way in which the Ministry of Employment and Investment gathers statistics on employment and investment in the province to at least determine whether or not they are matching the projections in the British Columbia "Economic Review and Outlook," which is published, of course, with great fanfare with the budget document.
I am asking the minister whether, to satisfy his own curiosity, if nothing
An Hon. Member: He checks his horoscope.
Hon. D. Miller: I do check my horoscope, to find out what you guys are going to ask every day in question period. So far it has not been very accurate.
There is statistics-gathering back and forth between ministries, I'm sure. I don't do it personally, but I know that that does take place. It is all collated by the Ministry of Finance, and, of course, they are responsible for the budget. I am well aware that these
The Chair: I believe that was a subtle reminder by the minister that we are straying from his estimates. The member could take that to heart.
W. Hurd: Thank you for that direction, hon. Chair.
Maybe I can zero in on the labour force percentage change projections, the employment projections and the unemployment projections, which I am led to understand are of passing interest to this ministry. Clearly, the Ministry of Finance, again, has made some projections. We know that they've been wrong before. I would think that the Ministry of Employment and Investment would, at least on a quarterly basis, be analyzing where the province is going in terms of employment, unemployment and the development of the labour force. Is the minister responsible for those items saying that, in fact, four months into the fiscal year, he has absolutely no idea whether the province and the government are on track? I believe he sits on Treasury Board. Can he give us any comfort, after four months of the current fiscal year, that the ministry believes that in terms of employment, labour force development and unemployment, we are on track, in terms of his own government's projections?
Hon. D. Miller: I think things look reasonably good. I'm advised by my officials that we do indeed track these things -- and yes, things look fairly reasonable. Obviously, you want to keep your eye on them; the vagaries of the economy are subject to fairly rapid change.
I was reading the Globe and Mail just this morning -- an esteemed paper in this country, and I would highly recommend it to the members opposite. On the front page of the business section was a story about some bright university people who have analyzed the economic projections, the economic forecasting ability, of the major forecasters in this country -- the banks, the economic institutions. Lo and
Yes, we track these things. We provide that information. Some of it is published, and things are looking not too bad.
W. Hurd: The minister just confirmed my point that taking one's forecasts out of the Globe and Mail, the Royal Bank Letter or the Scotiabank newsletter is no substitute for the projections of his own government. I am comforted by the fact that after ten minutes of questioning, we've now confirmed from the minister that he actually does compile some statistics on a quarterly basis, and they are cross-referenced, one assumes, to the budget numbers. If I can characterize his assessment: they look not bad, pretty good, decent. Those aren't quantifiable numbers that we can take to the bank; nevertheless, I'm delighted that he has done that.
Before this set of estimates is over, perhaps we can get a commitment out of the minister to provide some sort of four-month snapshot of where we are in terms of those three items which would be of interest to his ministry: labour force development, employment growth and the unemployment rate. So I look forward to that.
[5:45]
Hon. D. Miller: Lo and behold, Mr. Chairman, into my hands has dropped a copy of this report. It's a delightful title: "To Err is Forecasters' Forté." Is that alliteration? I think it is. "Over a 13-year period, eight business forecasters managed accurately to predict the subsequent year's growth in gross domestic product only twice." Gee, and they're still in business. I'll bet the government has a better track record. I'm just trying to make light of it to some degree, because I think the opposition have got themselves bound up in a certain way, and they're far too serious.
As I said to my friend Mr. Bentley the other
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and lo and behold, the pulp price hit the tank. Those are the things that happen in business. They happen occasionally in government, and they occasionally happen to political pundits.
With respect to any statistical information that the member might be looking for, I can certainly offer some assistance to the member's research department. I think Statistics Canada has a phone line, and all of this information, as detailed as the member might want to get, is available. If you've got a hot young researcher over there, perhaps you could turn him on to the phone line, and you'd have more statistics than you'd know what to do with.
W. Hurd: One assumes that an average British Columbian would be able to go to a ministry of their own government to get the information, not Statistics Canada. But that's the way it is, I guess.
I want to ask another series of questions about an issue that I know has been canvassed to some degree: competitiveness in the forest industry. I know this issue has been dealt with briefly, and I wonder if the minister could advise the committee whether he expects the competitive position of the forest industry to remain level or to decline in the current budget year. I'm sure he's aware of some projections in the industry that have suggested that we've undergone a major decline in terms of the overall competitiveness of the forest industry in British Columbia, because of a whole host of factors: the cost of regulation, the cost associated with the code requirements, the cost of fibre and the additional increases in stumpage. I wonder if the minister could tell us what he expects in the coming fiscal year for the competitiveness in the forest industry. Does he expect it to continue to decline or to hold steady? Has the minister done any work on this? That's one obvious question.
Hon. D. Miller: I could speak at length about the forest sector, and I think I did last night. I think there are some challenges, actually, that the sector faces -- particularly the pulp sector. That has more to do with changes around the world. In fact, it's strikingly similar to the kind of fundamental changes that we experienced in the days when we were pretty much the only game in town, and we could flood the market with dimension products. I think there are some challenges for the pulp sector in terms of competitiveness. We do have to compete with countries around the world; each is different and each has different markets. But by and large British Columbia's forest sector has proven to be very, very robust.
One thing that illustrates this happened last year when there were some difficulties with respect to fibre shortages. British Columbia companies were out buying logs from outside our borders. They bought them in Alaska, Saskatchewan, Alberta, Manitoba and the United States. It's a little-known fact that British Columbia was a net importer of round logs -- raw material. That's a great thing. That's a great testament to the robustness and competitiveness of the British Columbia forest sector. I have absolute confidence and faith that it is a sector that understands the nature of change and is going to adapt to change. Quite frankly, now that we have a strong partnership between the forest sector, working people and communities through Forest Renewal, we have some ability to provide resources to overcome some of the challenges and problems that change brings, and that sector will be stronger than it has ever been.
These last few hours have been a delight, but at this point I move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:50 p.m.